Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

KIRKCALDY BURGH EXTENSION, &C., ORDER CONFIRMATION BILL

Considered; to be read the Third time Tomorrow.

BUSINESS OF THE HOUSE

Mr. Churchill: May I ask the Lord President of the Council whether he has any statement to make on the business for next week?

The Lord President of the Council (Mr. Herbert Morrison): The business for next week will be as follows:

MONDAY AND TUESDAY, 6TH AND 7TH NOVEMBER—The Debate on the Address will be continued on Monday and brought to a conclusion on Tuesday. Perhaps, Mr. Speaker, you will be good enough to indicate today, for the convenience of the House, which Amendments to the Address you propose to call and on which days.

WEDNESDAY, 8TH NOVEMBER—Second Reading of the Solicitors Bill and Committee and remaining stages of the Expiring Laws Continuance Bill. It is hoped to obtain the Second Reading of this Bill, which is usually a formal stage, and the Committee stage of the necessary Money Resolution tomorrow (Friday).

THURSDAY, 9TH NOVEMBER—Second Reading of the Colonial Development and Welfare Bill and Committee stage of the necessary Money Resolution.

FRIDAY, 10TH NOVEMBER—Second Reading of the Restoration of Pre-War Trade Practices Bill.

We think it would be more convenient for the House to take the Motion relating to Private Members' time at the beginning of business on Wednesday of next

week. The arrangements are under consideration and we hope to be able to hand in the Motion on Monday.

Mr. Churchill: I understand that discussions are still proceeding through the usual channels about the Strasbourg resolutions. Might I be permitted to submit to the right hon. Gentleman that time is important in this matter because people who are called upon to go abroad have to make their arrangements, and naturally they would like to know what is the course upon which the Government have decided. I hope that the right hon. Gentleman has given his attention to this matter. Monday, 13th November, would be a very convenient day if the Government were able to give it to us.

Mr. Morrison: As my right hon. Friend the Prime Minister indicated, this is a matter which we are quite prepared to discuss through the usual channels, and I have little doubt that some accommodation can be reached; but I am bound to point out that according to the official summary report of the Consultative Assembly—this is official from the Council of Europe—at Strasbourg the Leader of the Opposition stated that, for Great Britain, he would promise that their resolutions—that is to say, the Strasbourg resolutions—would be brought before the House of Commons through the procedural opportunities open to the official Opposition. Moreover, in "The Times" report it was stated that the right hon. Gentleman could guarantee that by the use of the facilities at the disposal of the official Opposition, all the resolutions would be brought before the House of Commons for discussion on their merits. I gather that the number of resolutions was 51. I do not know how many Supply Days, taking the right hon. Gentleman's own basis, it would have required in order to take all the 51 resolutions before the House, but notwithstanding that, I am a kindly and charitable person and we will see what we can do about it.

Mr. Churchill: In view of the statements which the right hon. Gentleman has made about his intended process of self-reformation, I venture to submit that one of the first things for a good foundation is accuracy, because I made it quite clear that I would use my constitutional powers as Leader of the Opposition to see that resolutions of the Assembly would be


brought before the House. It is quite true that if the Government declined that offer and refused to take any responsibility for it, then naturally we would have to use our ordinary rights; but I should be the last to wish to deprive His Majesty's Government of the opportunity of putting themselves more in line with the general movement of Socialist thought on the Continent. I hope they will not fail to give the matter the fullest favourable consideration. Indeed, I am encouraged by the tone which the right hon. Gentleman has adopted and, still more, by the nod which the Chief Whip has just given us, to think that the matter can be arranged if not through the usual channels, then by special and direct communication.

Mr. Morrison: As I have indicated, we are feeling in a kindly and accommodating mood. However, I would say to the right hon. Gentleman that he should be a little careful at Strasbourg not to give sweeping assurances as to what he will do out of Opposition time—[HON. MEMBERS: "Oh!"] Oh yes, I have proved my case—and then come back as if he had not given these sweeping promises at all. Still, I realise that the right hon. Gentleman is in a difficulty and, as I like him, I will try to get him out of it as best I can.

Mr. Churchill: I did not in any way take too much upon myself. I said that I would do my best to persuade the Government but, if I failed in doing so, I would not hesitate to compel them. That is exactly the position.

Mr. Ellis Smith: May I ask my right hon. Friend whether he has given consideration to a point I am going to raise, and, if not, will he consider it between now and the time when the Debate takes place? Do the Government consider it was good policy, or right, for the right hon. Gentleman to raise the question of defence at the Strasbourg Assembly, were the Government consulted before it was raised, and will the Government consider between now and the coming Debate what should be our attitude to future conferences when the Leader of the Opposition and other right hon. Members can go to the Strasbourg Assembly and speak over the head of this House?

Mr. Speaker: I thought it would be for the convenience of the House if I indicated the course of the Debate——

Mr. Ellis Smith: I cannot raise a point of order, Mr. Speaker, but before we proceed to the next point, I should like to ask my right hon. Friend whether he will give consideration to the points I have raised.

Mr. Speaker: It was not a question on business; it was rather an argument, I thought.

Mr. Ellis Smith: Then, on a point of order, Mr. Speaker, this question of the Strasbourg Assembly has been raised, important implications affecting this country are involved, and if a debate is to be arranged, then this House is entitled to know whether the Leader of the House will give consideration to the points that have been raised.

Mr. Speaker: I have no doubt that everything the hon. Member has raised will receive consideration. We need not pursue that matter further.
I thought we would continue the general Debate on the Address until the end of Friday this week. There are many hon. Members who want to speak. There are still 80, as far as I know. There may be a few to spill over on to the last two days. Only 17 hon. Members spoke yesterday, which means just over two an hour. At that rate there will not be many more in the next two days. I am sorry, but I cannot help it. That is a matter for hon. Members themselves.
I thought that on Monday I would call the Amendment in the name of the right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot).
[But humbly regret that the Gracious Speech shows no resolve to ensure a steady increase in the rate of house building up to at least 300,000 houses a year.]
On Tuesday I shall start with the Amendment in the name of the Leader of the Liberal Party.
[But humbly regret that the Gracious Speech contains no reference to the rising cost of living and makes no adequate proposals to relieve the growing burden of increasing prices on consumers, particularly on the lowest income groups.]
I hope we shall come to a decision on that very soon. Then I shall call on the other official Opposition Amendment in the name of the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan).
[But humbly regret that the only contribution in the Gracious Speech to the solution of the grave financial and economic problems which confront the nation is to make permanent the wartime powers of control by regulation already enjoyed by the Government, and to extend still further the State ownership of industry, instead of using their powers to halt the process of depriving the road hauliers of their livelihood and their customers of their services and to defer the vesting date of the nationalisation of iron and steel at this critical time.]
That will conclude the Debate on the Address.

BILL PRESENTED

LOCAL GOVERNMENT (SCOTLAND) BILL

"to make provision for increasing the amount which may not be exceeded by town councils in Scotland in respect of certain expenditure; for raising the limit on special district rates leviable by county councils in Scotland for certain purposes; and to restrict the power of county councils and town councils in Scotland to borrow money for certain purposes," presented by Mr. McNeil; supported by the Lord Advocate, Mr. Jay, Mr. Thomas Fraser and Miss Herbison; read the First time; to be read a Second time Tomorrow, and to be printed. [Bill 7.]

Orders of the Day — KING'S SPEECH

DEBATE ON THE ADDRESS

[THIRD DAY]

Order read for resuming adjourned Debate on Question [31st October]:
That an humble Address he presented to His Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament."—[Mr. Kenyon.]

Question again proposed.

2.47 p.m.

Mr. Clement Davies: Except for one paragraph, the Gracious Speech from the Throne does not cause us to look forward to a very exciting legislative Session. Possibly one ought not to complain about that, for this is a period when undoubtedly there should be an overhaul of administration and a period of retrenchment, instead of going forward all the time with fresh legislation, one Act piling upon another.
However, I must say that nowadays there seems to be a growing habit of placing in the Gracious Speech a number of what in themselves, I dare say, are quite important matters but which are really rather trivial for mention in the Gracious Speech. They are, in fact, a catalogue of small Acts which the Government propose to introduce during the Session and about which there will not be controversy. It is almost like window-dressing. I am not sure that it is in accordance with modern window-dressing for, as I understand it, nowadays shopkeepers find that they want to put one thing only in the window lest attention should be diverted by smaller things away from that main thing. It would perhaps have been better, therefore, had the Gracious Speech been confined to the one important paragraph which will undoubtedly lead to controversy.
In connection with one of those smaller Measures there seems to be some conflict of principle, namely, on the question of salmon and trout poaching, for it seems


that the Government are really recognising the sacredness of private property while, at the same time, following their principle of putting an end to private enterprise and initiative and a certain amount of risk that people are prepared to take.
Turning to the foreign situation, it is right this afternoon that we should all give our congratulations, not only to the United Nations Assembly, but to the Secretary-General himself, upon the reelection of Mr. Trygve Lie as Secretary-General. He has undoubtedly earned the respect of the entire world and has done extraordinarily good work. It may be that he has made mistakes. I hope he has, because it is human to err and we do not want a superman as Secretary-General in charge of such an important body.
The foreign situation continues to give us cause for anxiety. We are all delighted at the turn of events in Korea and we should like to congratulate all who took part, especially General MacArthur and the American Forces; and let us also pay a tribute to our own naval and other Forces for the splendid part which they, too, have played. I am always impressed by the language which is used about these actions—which many of us regard as marvellous and for which we do not know what adjectives to use—by way of recommendation to the Lords of the Admiralty. I can apply those words to the actions of our naval Forces around Korea and to our other Forces today. The words, as I understand them, are that "It is desired to call the attention of the Lords of the Admiralty to the correct conduct of these officers and men, following, as they have done, the tradition of the Forces of this country."
But there can be no letting up because of the turn of events in Korea. There is danger in many parts of the world. The present threat in Tibet and the position in Indo-China and Malaya call for renewed activity on the part of all the free nations to be prepared to play their part. Not only must we be strong in armaments; we ought to be following that up by being economically strong throughout the free nations of the world. Rightly we are prepared to help one another with armaments, so that the strong can come to the assistance of the weak;

but do not let us stop there, for armaments alone will not stop war. What we must also do is to come to the help of the weak in order to increase their strength economically.
On foreign affairs I want to say this: I wish that we were taking a stronger lead in world affairs. We are in a better position to do this today than we have been for a very long time. America, which is doing such great work on behalf of the free nations, is now occupying much the same position as we occupied throughout the 19th century and at the beginning of the present century. She is the strong partner among the free nations, and, as with ourselves, suggestions made by her, as they were made by us during the 19th century, are very often suspected merely because of the strength of the nation or the Government making the suggestions.
Today, the material strength has passed away from us and is now across the Atlantic, but we have had far greater experience in dealing with foreign nations in all the five continents than has any other nation. Suggestions should be coming today from us; we should not wait for them to be made on the other side of the Atlantic and then merely nod our heads. I am sure that we could exercise a far greater moral influence upon the trend of affairs than we are doing. It is quite obvious that close co-operation is needed. I am grateful to that very kind man Mr. Dean Acheson, and to President Truman—and I am sure that everyone in the House and in the country will congratulate the President upon his escape yesterday—[Horn. MEMBERS: "Hear, hear."]—both of whom have shown wide vision and given a great lead, but I wish that every now and then we ourselves, with all our experience, would make the suggestion first and not wait for it to come from over there.
It was very rightly pointed out in the last Session that today not only must we co-operate in defence and, as I have said, also in economics; we must co-operate as much as we can politically, leaving each country to follow its own method of choosing its Government and its form of governing itself. To me, however, all these matters—defence, economics, and political co-operation among countries—must be interlinked. The foreign policy and the defence of this country are matters which should go together.
While on this subject I must refer to the incident which took place before the Motion which we are discussing was called. I wish that the Government were not so lukewarm and tepid about European affairs. I hope that they desire to work more closely with Europe, but from their very actions and speeches they seem to be tepid and trying to hold away. We had an instance just now. It is perfectly right that we ought to be discussing the resolutions which were passed at Strasbourg. Promises were made by those who were present—and they were present from every Parliament—that these matters would be brought before Parliament. Why, then, do the Government choose to make a tiny point about what the right hon. Gentleman the Leader of the Opposition said? They need not have waited for what he has said on anything. How much better it would have been had the Government come forward voluntarily and said, "This is such a vital matter concerning the freedom of Europe and its future work that we will ourselves readily bring this forward and do our best to have it discussed."
On the question of co-operation, I am surprised that there has been no mention in the Gracious Speech, nor any mention so far from the Government Front Bench, of the Torquay Conference. I am to be followed later, I understand, by the Chancellor of the Exchequer—and, by the way, I congratulate him most sincerely on succeeding to his high office. I hope that the right hon. Gentleman will explain what policy the Government intend to pursue at that conference and will give some account of how it is proceeding.
We are now face to face with further burdens, namely, the very heavy cost of re-armament, which is falling upon us at a time when we were hoping that we had now turned the corner and would be better able to meet our obligations. Having fought, as has this country, through two world wars and made such sacrifices as we have made, and having made the tremendous effort which we have put forward since 1945, it is sad that once again this country has to face re-armament on behalf of the freedom of the world. The question uppermost in our minds is: How is that cost to be met? It was admitted from the Treasury Bench in the last Session that we have been taxed almost to super-saturation point

and that there are really no reserves upon which the Government can still call.
How, therefore, are we to meet this increased burden upon the National Exchequer? It seems to me that what is happening, and what we are all really suffering from, is that the Government are trying to do too much and are doing it all at once. Consider the tremendous capital expenditure. There is huge capital expenditure on new buildings of all kinds. Of course, a great number of them are necessary—do not let the House think that I say they are unnecessary. All I am pointing out is that they are all coming at one and the same time. Buildings, factories, houses—I see the Minister of Education is present—huge new school building programmes—[HON. MEMBERS: "Hear, hear."] I am not criticising or saying that any one of them is not necessary, not a bit. All I am pointing out is that they are all coming at the same time. [HON. MEMBERS: "We want them."] Maybe we do, but at the same time, having taxed ourselves to the extent of more than £3,500 million in time of peace, now we are called upon to incur almost war expenditure on armaments. Some priority has to be arranged and what I want to know is whether the major items are kept continually under review by the Government.

Mr. Shurmer: Of course they are.

Mr. Davies: The hon. Member has not yet had the honour of sitting on the Government Front Bench. What we have to do is to see what has to be done, what we cannot do without, what must be given real priority and postpone those matters which have to be postponed.
The two most striking developments during the last six months are, first, the continued marked improvement in industrial output. It has been quite amazing. Second, there is, in spite of the threats still made in regard to it, the continued stabilisation of wages. Those are two really striking events and the combined effect of those two events is that there has been an increase in the sterling export prices we have received and a general increase of output throughout the country. But all this, working together with the wage stability, has produced a considerable increase in profits. A large


part of those profits has been put into reserve or, as one only has to look at the Government returns for each week to discover, set aside as reserves for taxation.
What that shows is that the Government, and the Chancellor of the Exchequer in particular, are increasingly dependent upon the extra profits to provide revenue for the Government and, of course, it is the one and only source for financing private capital creation. But the stability of the whole situation still depends upon what I would call the wage freeze, the continued stability of the present wage level. If wages rise, then prices rise and, when that happens, wages rise again and we have the inflationary spiral. There will be a fall in profits, leading to a fall in savings and then a fall in the Government revenue upon which the Chancellor today depends.
The rise in output undoubtedly has given us a fresh hope, but unfortunately, we have had to use much of that output in increased exports, first, because of devaluation and, second, because of rising world prices. Therefore, there are worsening terms of trade with which we have to contend. It is estimated that today we have to export £250 million worth more a year to pay for the same volume of imports we had before devaluation.
Therefore, I do not see how we can meet both our home programme and rearmament without something being done, especially now that Marshall Aid is to come under reconsideration. I wish to throw out a word of warning. Because of the increase in the gold reserve and the improvement in our external trade, there is too optimistic a view held, certainly in America, of what our position is. I am sure the Chancellor will agree with me that the position is a really dangerous one. There is only one answer to inflationary pressure over a long period. It is increased productivity, but that is bound to take time. In the meantime the matter which is worrying everyone, all classes, but especially the lower income groups and particularly old age pensioners—there is not one of us in the House who does not get letters almost daily about this matter, pathetic letters—is the increasing rise in the cost of living.
I thought the most realistic speech made in the Debate so far was that by the hon. Member for East Ham, North (Mr. Daines). He brought to the House a sense of reality as to what is really happening in ordinary households throughout the country. He was quite right in criticising the index of the cost of living. It does not really reflect what is the true position in regard to retail prices. It is sheer nonsense to tell people that there is only a rise of 2 per cent., or of two points. They know better what the pound is purchasing. I also agree with what he said about the failure of the Monopolies and Restrictive Practices (Inquiry and Control) Act. I warned the House at the time it was introduced that it was really almost a fake Measure, which did not get down to the real questions with which we have still to deal. I would have preferred it, if the Government had brought in a really sound Bill dealing with all these matters.
Rising prices are affected by the amazing rise in world prices—wool, tin, copper, rubber—rubber 400 per cent., I understand—and zinc. The question of housing in this country is important and vital and, again, I am quite sure that there is not an hon. Member who does not get letters, pathetic letters, which cause real anxiety, from people wanting proper, decent, comfortable, homes. What amazes me is that people, in spite of all these difficulties, are able to keep up their spirits—and the high moral attitude of the country is something we ought to commend.
But, more important than the housing question is the question of the cost of living. Controls will not stem the rising tide in themselves. The pound is being devalued in this country; it is purchasing less. Articles are the same but we have to give more money for them, which means that the value of the pound is going down. [An HON. MEMBER: "What is the remedy of the right hon. and learned Gentleman?"] I thought I was carrying the House with me. There is overspending today; far more than we can possibly afford. That leads to higher and higher taxation and further calls, which means there is a call from the people themselves for higher wages or salaries to meet those higher demands. So we go on with these continual rises in the cost of living and the call for more and more money, which really depreciates the money itself.
I have already mentioned my hope, to which the right hon. Gentleman's predecessor so often paid at least lip service, of an increase in world trade. That is why I am so anxious to know what part we are playing in the Torquay Conference, and for there to be a closer co-operation about materials such as wool and tin between the allied countries of the free world.
I wish to turn for a few moments to the most important paragraph in the Gracious Speech from the Throne. It says:
In order to defend full employment,"—
I shall come back to that—
to ensure that the resources of the community are used to best advantage and to avoid inflation, legislation will be introduced to make available to my Ministers, on a permanent basis but subject to appropriate Parliamentary safeguards, powers to regulate production, distribution and consumption and to control prices.
Can the right hon. Gentleman tell me which of these controls has secured full employment? I should have thought that the course of events—the war and the fact that we have had to do without so many things for six years, the need to rebuild the whole economic system of this country—made it obvious that there were more jobs waiting for people than people for jobs.
If controls can stop inflation what have the Government done to stop the inflationary pressure that is now and has been going on? It seems to me that these words have been put in in the way they have been because they are "time honoured," like Lancaster. They have a familiar ring about them—"to regulate production, distribution and exchange." I thought that had been dropped out of the programme, but it seems to have returned in this form, and to have been brought back to satisfy some Government supporters who still believe in that slogan.
In the last Session, I objected to the form of legislation which was still in existence. I objected to it when it was brought in by the Government, in 1945. I objected again in 1947, and my objection still remained the same at the end of the last Session. One realises that at a time like this there has to be a certain amount of control; neither I nor my party have ever denied it. There has to be a certain exercise of economic

planning; we have no doubt about that. But what is happening is that the Government are mixing up the control with the form which it should take, and it is to the form I am objecting. I do not like control being imposed upon the country by decree.
As I say, I stated my objection at the end of last Session. I do not know what the Government now propose to do, but what they did in 1945 and 1947 was to introduce or re-introduce, in time of peace, a form of legislation which was meant for time of war and only for time of war, and to continue that for six years after the end of the war. Do they now intend to re-introduce it in this form, giving them, as the right hon. Gentleman the Member for Woodford (Mr. Churchill) said, a "complete blank cheque." Or do they intend to deal with the matters which they feel must be controlled for the sake of the country measure by measure, so that the House as a whole can take part in the discussion and see the extent to which the Government can go? Or do they mean, as I am afraid they do, to bring in one comprehensive measure, as was done during the war, allowing every Government Department to issue such regulations as they choose?
The Government say that this is to be
subject to appropriate Parliamentary safeguards, …
What is the meaning of "appropriate"? Appropriate to whom? Appropriate to the Government using the powers or appropriate to the Members of this House? I called attention last week to the great difference there is between these regulations and an Act of Parliament, that the regulation is made by the Department only and that we cannot amend it. All that happens is that it is brought before the House, which can express either agreement with it or throw it out because the House disagrees with it. The House cannot change it.
Compare that with an Act of Parliament, which is far more carefully prepared by the Department than is a regulation, and takes a long time to prepare before it is brought here. Has any Member ever seen a Bill, however, carefully prepared, which has not been amended? Amendments can be moved from any part of the House. I object to giving full power to the Government to do as they like. I do not believe in the sovereignty of any


Government, however powerful they may be. I much prefer the sovereignty of the people as expressed in and by this House, and if the Government intend to introduce legislation of a war character it will be met with the most fierce opposition.

3.18 p.m.

Mr. Oliver Lyttelton: I do not intend to follow over quite so wide a field the accomplished and cogent speech which has just been made by my right hon. and learned Friend the Member for Montgomery (Mr. C. Davies). He used one phrase, in particular, which struck me; he said that it was a sad occasion that we should have to discuss these matters of rearmament and so forth today. I, too, feel that it is a sad occasion. It is always sad to stand amidst the wreckage of human hopes, even if they were not hopes which one entertained oneself.
Five and a half years ago, when the Socialist Government were first elected, their supporters believed in a new world. According to many hon. Members opposite, history began in 1945. Five and a half years ago a world of peace, prosperity and stability was to be the lot of the common man and the common woman. Left alone could speak to Left; peace with Russia was just round the corner; the golden age was about to dawn, except, of course, for certain naughty people. These illusions have been shattered by events. As the right hon. and learned Gentleman said, it is indeed sad that we should have today to examine, as I must do, the subject of the economics of defence and rearmament, the rising cost of living and inflationary pressure. It is to those three subjects that I wish to confine my remarks this afternoon.
First of all, I think it most necessary to try to put the rearmament programme, as far as we know it, into perspective. I have not found it at all easy to do so, because the figures available to a private individual are somewhat incomplete. My own calculations would seem to show that the output of munitions, which I think the right hon. Gentleman put at a value of £850 million extra during the next three years when he was speaking in September, could be fitted into our present economy without the general consequences—and I emphasise the word "general"—being such as to rock the whole structure of our economy.
No doubt very serious local difficulties will quickly make themselves felt. There will be bottlenecks, the most serious of which will probably be that caused by the shortage of labour. We have not yet been vouchsafed the information as to whether the Government intend to direct labour into the munitions industries. Once, however, the country is supposed to be run upon a planned economy, once there are wage freezes, and once we take into account the tragic shortage of houses, the labour problem will locally be the most difficult to overcome.
The dilemma with which right hon. Gentlemen opposite are faced arises from the fundamental fallacy of trying to combine a planned economy with a free society. I often used to put this question to the previous Chancellor of the Exchequer—and may I say that his absence and the cause of his absence are as greatly deplored on this side of the House as they are on the other?—I used to put this question, genuinely seeking an answer. What is the good of a planned economy if it does not also plan the lives of every man and woman "gainfully employed"—because that is the horrible phrase by which we describe the working population—what is the good of an elaborate system of priorities, controls, allocation of materials, import and export restrictions and stimulations, if men and women cannot be found to turn the raw materials into those things which we need first?

Mr. Sydney Silverman: Mr. Sydney Silverman (Nelson and Colne) rose——

Mr. Lyttelton: if the hon. Gentleman will let me complete my argument, I shall be very willing to give way, but I hope that the hon. Gentleman will have the opportunity of catching your eye, Mr. Speaker, and will let me make my own speech. It seems to me that here is a fundamental issue. What is the good of assembling the bricks and mortar, the pipes and the timber, the steel and the licences and the whole apparatus on the site if the men and women to turn those materials into a house are not also, under a planned economy, to be directed there?

Mr. S. Silverman: I wanted to ask the right hon. Gentleman a very short question. Is he seriously arguing, on behalf of his party, that a planned economy is not possible in a free society?

Mr. Lyttelton: Certainly I am arguing that, and if the hon. Member has listened with his usual attention, he would have found that is precisely my argument.
Sir Stafford Cripps always answered the question by saying that the present Government were attempting to do something which had never been done before, and this, of course, is a graceful circumlocution for saying that they were trying to do something which cannot be done. [HON. MEMBERS: "No."] We can, of course, have a planned economy, and secure the emergence from the production line of those things which our rulers judge to be first necessary, if we are at the same time prepared to tell every man and woman in the country where to work, what to work at and what to work for, in other words, the place, the nature of their work, and the wages they are to be paid. Then a planned economy will work. But a planned economy depends upon planned human beings, and the sooner right hon. Gentlemen opposite face that stark fact, the better.
No hon. Member, whatever his political complexion, would dissent from the very obvious statement that the human side of industry is what counts. It is human hands and brains which turn the inert materials into the finished goods, whether they be guns, houses or roads, or what we will. So this is the first dilemma. We cannot have a planned economy and a free society. The two things are mutually destructive.
Be that as it may, one thing is quite sure, and that is that the people of Great Britain are not going to permit society to be other than free. We have fought too long in the defence of our liberties, both against the foreigner and among ourselves, to let any Government, even one commanding a majority of six or seven, to attack the fundamental liberties of the subject, and unless they do so, I wish to emphasise that a planned economy will plan everything except that which matters. On this side of the House we believe that it is possible to have a policy under which there is a great deal of freedom of choice and that it is possible to secure it without disorder. Liberty without licence is a possibility, but where everything is licensed, or subject to licence, there cannot be any liberty. It is useless to discuss the

economics of rearmament without recognising at the outset this fundamental dilemma, on which there has never been as yet any satisfactory answer—and extremely little interruption from below the Gangway. That is the fundamental dilemma with which the Socialist policy is faced.
Having said that, I turn back from that introduction to try, so far as I can, to put the rearmament programme into perspective. I should be genuinely interested and grateful if the figures which I give can be subjected to some criticism and examination by the right hon. Gentleman in his reply. I do not claim that my figures are accurate individually, but I do believe that they give a fair general presentation. I calculate that the money value of the output of the industries particularly affected by rearmament, namely, engineering, shipbuilding, iron and steel, traction—in which I include both motor cars and lorries—chemicals and aircraft, is well over £2,000 million a year, something near £7,000 million in three years. Out of the £1,200 million of extra money which the Government are to spend on rearmament, somewhere about £200 million is to be spent on pay and allowances for the Armed Forces; and I think the right hon. Gentleman put £850 million over three years as the bill for munitions. That is about £280 million a year, so that these figures seem to me to be an increase over the next three years—and the order will progressively rise—of about 12 per cent. overall in the output of those industries, if we are to fulfil the present munitions programme.
I frankly do not regard it as impossible, although, as I have said, very severe local effects will no doubt be produced. Perhaps some of the most serious will come in what the Americans call the "automotive" industry, but if there is to be a continuance of the increased productivity—and although I regard the figure given as extremely suspect, I am sure there is more than the characteristic annual increase—a target of £280 million a year over three years is not unattainable while at the same time maintaining the general economic activity at its present level.
In fact, I am suspicious enough to think that the rearmament programme has been got at the wrong way round. I


think that the Government have probably asked the planners what the largest rearmament programme could be to enable them to do it without serious dislocation. They probably sent for Sir Edwin Plowden and said, "Tell us what a munition programme could be without our having to face the population with any of the consequence. Do not put it too low or the Americans will find out it is not enough. For Heaven's sake do not use the phrase 'Business as usual,' but that is really what we mean. We would like to get away with it without having to make an unpopular Budget because, Sir Edwin, it may not have escaped your attention that the political parties are nearly in equilibrium and there might be electoral effects if we had to place too many restrictions upon the consumer." I must say that with those terms of reference, which I admit are products of my imagination—[HON. MEMBERS: "Hear, hear."]—we
shall see—I believe Sir Edwin has done his job fairly well. The scale of arms and re-armament, I think, was being approached with the cart before the horse, and it is being worked back from the answer.
We all agree, or nearly all of us, that our re-armament and the need to become strong is dominant and imperative. Defence needs should be approached from the point of view of defence. I want to make the first point that the armament programme has, either by design or by chance, been pitched at a figure where the Government could follow a policy of "business as usual" with all the emollient electoral effects that that would have, and could continue to encourage exports and so look to no general interference with the present emphasis on industrial output.
Now I turn to a subject with which the right hon. and learned Gentleman the Leader of the Liberal Party has already dealt, namely, the cost of living. The Lord President of the Council, in a recent broadcast, attributed, or tried to attribute, the rise in the cost of living to the effects of the North Korean campaign, and presumably—I imagine that he was speaking seriously—he referred to the increased cost of raw materials which the American re-equipment programme has undoubtedly caused. I have his words here. He said:

The cost of living has, of course, gone up. Earlier this year there was a tendency for prices to ease, but the Korean war put a stop to that.
Here, again, we see the value politically of the right hon. Gentleman. His fertile imagination can flit across the economic field and manage to find the only factor for which His Majesty's Government cannot be held directly responsible, whilst at the same time suppressing all those factors for which they are directly responsible. I admire that, as a young Parliamentarian. "The Times" leading article on the following day said:
Mr. Morrison's piece left out not only the Prince of Denmark but the King as well. Neither inflation nor devaluation—which has wrought a striking transformation scene of which the final, and perhaps the least comfortable, details are not yet seen—found a place in his skilfully simple discourse.
And, of course, our own armament programme, however much the Lord President may suggest it, has so far made no effect upon the cost of living—or a negligible effect—because there is no armament programme in effect yet. As far as I have been able to find out, very few orders have been placed for extra munitions of war in any of the industries concerned. No instructions have been received that this or that production is to give way in favour of the production of arms. I hope that during the course of the Debate we shall find out whether the Government have any plans and, if so, what they are.
It is already many months since the North Korean campaign first awakened the Government to the impending dangers, and yet there is neither any industrial plan for fitting in this production—which I think can be done—nor have any orders on a large scale yet been placed. Why is this? Is it because we are still waiting to know what American aid will alleviate the problem for us? Or is it due to the wish to leave things as they are until after the next General Election? Perhaps we can have some enlightenment on these points.
I turn to the earlier causes, far earlier than those which the Lord President mentioned, to which we can attribute the rise in the cost of living. I should attribute the ever-rising cost of living in the main to two causes other than the one I have mentioned; first, devaluation; secondly, excessive Government expenditure. I said that the bad effects of devaluation are


slow to make themselves felt. This is because there are stocks of goods in the warehouses and raw materials in the pipe-line of considerable extent bought when the pound was worth four dollars, and bought at lower prices than those which now obtain. [Interruption.] I hope I am not interrupting the hon. Gentleman.

Mr. S. Silverman: No.

Mr. Lyttelton: I have already given way to him, and I hope that he will give me the opportunity to continue my speech. Whereas the stimulus to exports is felt first, the bad effects of devaluation on internal prices are much longer delayed. I must produce figures, if the House will suffer me, to prove my point. The Retail Price Index has remained remarkably steady. I attribute this to the causes which I have mentioned—stocks in the shops and the warehouses and raw materials in the pipeline. From June, 1947, when the new Index was introduced, the cost of living indices followed this course: 1947, 100; 1948, 110; 1949, 111; 1950, 114 for as far as we have gone this year.
On the other hand, wholesale prices, which respond to devalued currency much more quickly than retail prices, have shown remarkably steep increases. Adjusting the wholesale index to correspond with the figures I have given, we reach these figures: wholesale prices, 1947, 100; 1948, 114; 1949, 120; and 1950, 142. Even this does not disclose the whole story, because import prices have risen by 25 per cent., and it would seem to show that wholesale prices have not yet fully reflected the rise in import prices. But retail prices must follow the rise in wholesale prices—and soon.
Thus, those who are now distressed, as I think we all are, by the high cost of living have little cause for comfort. It will continue inevitably to rise sharply. Devaluation was not, as it is now often represented to be, an act of policy. It was the surrender to the inexorable facts of the exchange and economic position of our country under Socialist management. It is true to say that devaluation stimulated exports more than any of us hoped and, as exports are the lifeblood of the country, this is a source of great satisfaction as well as of surprise to hon. Members in every part of the House. I was surprised that the stimulation was

so great, but this is the good part of devaluation. This volume of exports must be maintained, and that in a world where raw material prices are rising steeply.
On the one hand, these increased prices for commodities like wool, rubber and cocoa, and other sterling area commodities of that kind, have a favourable effect upon our balance of payments, judged as a sterling area, and are perhaps the principal causes of the increases in our gold and dollar reserves, which are so comforting to us all. On the other hand, the rise in raw material prices, which has helped our balance of payments, is one of the causes, and will in the future be a much greater cause, of decreased real wages or the increase in the cost of living, however hon. Membrs prefer to express it.
Our competitive position in the export market is to be maintained, if I judge Government policy aright, at the expense of real wages. The wage freeze, for example, is simply a confession that we are having to devalue the work of the wage earners in order to make it fit in with Government policy and our balance of payments. The Colonial Secretary, when he was Minister of National Insurance, in a moment of eloquence or exuberance, said on 19th September, 1949, when defending the policy of devaluing the pound:
In the inter-war years the Tories tried to solve the problem by devaluing the worker.
Unfortunately, what right hon. Gentlemen opposite have done is to devalue both the worker and the pound.
Many of the favourable effects of devaluation have already been felt, whereas the bad counterparts are only now beginning to appear. We have had a pretty good time, because we have been living on stocks bought at much cheaper prices, and are now beginning to pay the bill. It is even worse than this, because the heaviest burdens of the ever-increasing rise in the cost of living will fall upon those least able to bear them. It is the pensioners, the old people, those living on fixed incomes, the self-employed, those who do not have the advantage of belonging to trade unions which can press for higher wages, who are going to feel it worst. All these people are going to feel the worst effects.
Again, as the right hon. and learned Gentleman said, the terms of trade have


been moving against us. Taking import prices in 1947 as 100, they are now 137, whereas export prices, taking 1947 as 100, have only risen to 121. I do not apologise for detaining the House with these figures and statistics, because, after housing, or perhaps equally with housing, the greatest pre-occupation of our fellow-citizens, and their wives in particular, is concerned with the cost of living. How can this rise be halted and ultimately reversed? It would be quite dishonest to claim that, after the mismanagement of our affairs during the last five years, an immediate stop can be put to rising prices. It certainly cannot, but the rise can be halted before very long, and this is perhaps one of the principal national tasks, or if hon. Members opposite prefer it, one of the three national priorities, about which we have got to bestir ourselves. I say that, if the remedies are unpleasant, they will at least be more bearable than the disease.
What are the remedies? They are well known. The first one concerns Government expenditure and the making of economies, which is always an extremely unpopular course. I am not a great admirer of all the things done under the so-called "Geddes Axe," although some of them were very necessary, and some great sources of waste were cut out; but these things will become more imperative when we have to spend another £400 million a year on armaments. The subject of Government expenditure must also be taken to include the nationalised industries, the new sinks down which our money is poured.
We have already had a Debate on the subject, in which we pointed out that the ratio of the costs of administration was rising continually in relation to productive labour. It is one of the well-known effects of bureaucracy and over-centralised production. All the common services are increasing in cost, partly as a result, and they act and react on the primary costs. When the price of coal is increased, it entails an increase in freight charges, which again increases the cost of the coal in parts of the country distant from the collieries. The increased cost of coal, again, increases the costs of industry, and the whole thing is a spiral.
Hon. Members would be quite wrong in imagining that we could make only small economies at the best. It is a question

of having to cut down, and it will be very unpleasant to do so.

Mrs. Braddock: Where?

Mr. Lyttelton: The hon. Lady has been reading the "Speaker's Handbook." There are a great many things which we shall have to do without. We shall have to do without the Ministry of Civil Aviation. Another one is a large portion of the Ministry of Supply. Others are the large number of Government agencies now engaged in paying too much in bulk buying of materials overseas. Then, there are all those engaged in not getting what we want by putting their feet into these buying missions. We shall have to do without the Central Office of Information. We must allow the taxpayer to find out how the Government are getting on without spending his money to tell him so. I would deplore having to do that, because these are very nice frills, but they belong to rich countries and not to poor ones.
I believe that there is great waste going on in the administration of the Health Service. I do not say that there is lavish expenditure on benefits; I say waste in the Health Service, and also in the nationalised industries. The first task must be to eliminate waste, and, in a Budget of £4,000 million, no experienced administrator would deny that we can make savings of a massive kind that would have a major effect upon the cost of living and upon the national life.
May I now turn to another slightly more technical aspect of the subject? Because of rises in sterling area commodities, sterling has become a comparatively strong currency, and it is necessary to proceed more rapidly towards the convertibility of the pound sterling than we are now doing. Such a step towards convertibility cannot, in my opinion, take place until there has been a political change in the country. For example, every time the Minister of Health and the more violent Members of the party opposite indulge in hysterical attacks on profits and capital—the things with which they are financing the nationalised industries—and in attacks on savings, the day of convertibility recedes.
The outside world, and especially the United States, has been much shocked by the Government's decision, in this time of international crisis, to put into effect


the nationalisation of iron and steel at the earliest date permitted by the Act instead of the latest. This weakens confidence in sterling, so that, concurrently with cutting down Government expenditure, and partly as a result of it, we have to try to restore the confidence of the foreigner in the pound sterling. It is not nearly so difficult to do as it was because sterling is a comparatively strong currency. This would be of direct benefit to the cost of living, although it would take a correspondingly long time to make itself felt. I say "correspondingly" because the effects of devaluation have taken months to make themselves felt in industry.
I now turn to other effects of the inflationary pressure. Again, this is rising, and it will rise still further; but the full effects have not yet been felt. American re-armament and the North Korean campaign are going to increase this pressure, and they will add their part to inflation. The rising cost of living leads to increased demands for wages and personal incomes, and these demands cannot always be resisted. As a result of rising wages, costs go up, and the well-known spiral of inflation soon gets into full swing. The competition of the Government and Government agencies for raw materials and services again increases the pressure on the supply of goods, and all this adds up to a very crucial problem. The new Chancellor of the Exchequer, I am quite sure, is not to be envied in the heritage to which he has succeeded.
I want particularly to refer to another difficult subject for the right hon. Gentleman. Taxation is already so high that his difficulty in financing the new programme will be very great. The right hon. and learned Gentleman the Leader of the Liberal Party referred to it, and I have particularly drummed it into hon. Members' ears until they must be tired of hearing it, but the fact is that one of the weaknesses of our economy is that we have no reserves of taxable resources. When I challenged Sir Stafford Cripps on this point, during the Debate on the last Finance Bill, he made the reply that we had saved £650 million in Income Tax, and that if this was not a reserve of taxable resources, he did not know what was.
Let us examine what he meant. This £650 million of taxable reserves represents concessions made to the lower income groups over five years. The answer, though I have no doubt not intended to

be misleading is, in fact, highly so. If it were to mean anything at all, it would mean that the only way to have reserves of taxable resources would be by cancelling those concessions to the lower income groups which we have given in the last five years. But even if they were all cancelled the annual advantage would only be £130 million a year as against the £400 million extra that the Government programme involves. Therefore, not only has the Chancellor of the Exchequer inherited a very difficult situation, but also a very misleading statement from his predecessor. I can hardly imagine that he would regard the cancellation of these allowances to the lower income groups as in the true sense of the word a taxable reserve.
The right hon. Gentleman the present Chancellor of the Exchequer was, and I expect still is, very clear in his mind that there is nothing more to be raised out of the so-called rich. He said:
Unfortunately, we cannot look much more towards redistribution of income. The plain fact must be faced by all with a sense of reality that there is not enough money to take away from the rich to raise standards of living any further.
That being so, it would be interesting to know how this theory and this reserve of taxable resources are to form part of the right hon. Gentleman's policy.
I want to say one word about the Purchase Tax. It was originally conceived as a tax to prevent people buying things they could do without. It has now become quite definitely one of the major sources of raising revenue, and economic arguments, whether they had any validity in the past or not, have long since given way to the demand for revenue.
Before sitting down I wish to say a few sentences, and not more, about housing, because we are to have a Debate on it next week. I would draw the attention of hon. Members opposite to the fact that since the Korean campaign began we have been committed to an extra programme of £1,200 million over the next three years for re-armament. If it was impossible to pitch the programme for houses at 300,000 instead of 200,000, and if it was impossible to contemplate for the three years 1948, 1949 and 1950 an expenditure of £150 million for an extra 100,000 houses, why is it now considered quite possible to add £400 million


a year to our industrial production for armaments? The reason is that the Government did not think that the needs of the country for housing were anything to be compared with what they now think are the needs of the country for armaments. We did not have the guns, and we were told that we could not have the butter.
Of course, one of the truths about a planned economy now emerges from the subject of housing. It would have been quite easy for an economist to say that the best economic course for the country to pursue in, say, 1946 was to build no houses at all. Homo sapiens might have found it easy to subscribe to such a theory. Even the White Paper on Full Employment brings out the not very startling axiom that if one can prevent people from buying when there is a boom and persuade them to buy in a slump, the incidence of boom and slump would be much less severe. But those things have a habit of not happening. Unfortunately, the world is not inhabited by homo sapiens, and even they might find it difficult to go about without houses and without coats and trousers. But we are not made up of homo sapiens; we have got to have these things, and, economic theory or not, we have got to build the houses. The Government are concerned with human beings and not with economic man.
Once again, planned economy has got this thing all wrong. It has no relation to the human needs and has placed economic theories far in front of them. Of course, if we are to have another 100,000 houses when this party is in charge then—and do not let us make any mistake about it—something else will have to wait. [HON. MEMBERS: "What?"] We cannot do everything at once. We may have to do with fewer technical colleges; we may have to postpone the educational programme. But the point I am making is that we must realise that housing, after defence, is the first priority. What does priority mean? It means something which comes in front of something else. By saying that the educational programme has to be postponed does not mean that we do not believe in education. We shall do it by policy, but not by trying to do everybody else's business for them.
What are we to think of a Government which has pitched the programme for housing so far below human needs and then finds £400 million a year not difficult to produce for armaments? Hon. Members will no doubt retort that one of the effects of rearmament and stepping up the housing programme will be a reduction in other forms of capital investment. No doubt that is true, but, in a free economy, capital investment is kept down to the things which are really necessary by the examination of profits and partially, no doubt, by the operation of interest rates and the sentiment which interest rates have upon the business community.
The only way to find out what industrial production is likely to be profitable is to find out if people are willing to pay the price for putting up the plants which make the products. If the industrialist thinks that a 5 per cent. interest rate for borrowing his money will still leave him with a profit, the plants will be built, but the marginal capital investments will be discarded. Once we have a supreme body which professes to project its mind into the future and professes to know that the output of mackintoshes is socially more desirable in 1953 than the output of motor bicycles in 1953, then no wonder that the national priorities get into a muddle. The only people who could be good judges of this are the manufacturers of mackintoshes and motor bicycles, and the rate at which they can borrow money—[HON. MEMBERS: "Why?"] I will tell hon. Members why. The gentleman in Whitehall will always get it wrong, and one of the reasons why he will get it wrong is that he does not have to pay for the mistakes he makes.

Mr. Crossman: Mr. Crossman (Coventry, East) rose——

Mr. Jenkins: Mr. Jenkins (Birmingham, Stechford) rose——

Mr. Lyttelton: As a Cantab I think I must be insulated from a mass attack by Oxford University.

Mr. Crossman: I want to be quite clear about what the right hon. Gentleman is saying. He says that only businessmen can judge priorities, but he previously stated that the Tory Party had laid down two absolute priorities, which were rearmament and housing. He is a gentleman speaking from Whitehall. If he can


lay down priorities, why cannot the Labour Government?

Mr. Lyttelton: I did not know the hon. Gentleman was going to make a speech; I thought he was going to ask a question. He seems to be quite unaware of the difference between a priority like rearmament and a priority concerning mackintoshes and motor bicycles. The hon. Gentleman fails entirely to appreciate this matter. To put housing or rearmament in front of the national programme is a policy, but what we have is a planned economy which tries to teach every industrialist exactly what his business is. The hon. Gentleman has entirely missed the point of the argument, and no doubt it was my fault. What I was talking about was the lower part of the capital investment which the imposition of national priorities will inevitably affect. He had better think this out before he interrupts me again, and remember that he is not speaking to undergraduates.
The effect of all these arguments adds up to a very critical problem which cannot be faced with complacency, and which cannot be faced by people who believe that all these desirable things can be done at once. The stark reality is that either we have to have further inflation, with all the serious consequences that that entails, or that we have to cut down and defer some of the things we should all like to do now. Only in this way can the true value of our social services be maintained; and in order to achieve that true value we have to dispense with some of our less essential spending. I see no signs of the Government facing this problem at all. I believe they hope to carry on without any change of policy until there is a new appeal to the country. They hope that retail prices will not go up too much before then, and they hope, by delaying the placing of munition orders, to subject our present economy to the least possible, and least conspicuous, strain. They hope that if economic facts make it necessary to cut expenditure, they will not have to do it.
All this may be good tactics, but it is not good management; it is not good finance or even straightforward politics. The economy of the Socialist Government has been bolstered up by American aid. It is one of the major factors, and I know how very distasteful it is to hon. Members opposite to be reminded of it. If that

aid is to be cut down the incidence of the problem we are discussing will be still heavier. There is nothing in the Gracious Speech to show that the Government have any policy in these matters. They may have ideas about a planned economy, but it is no solution to the problems we have now to face.

4.3 p.m.

The Chancellor of the Exchequer (Mr. Gaitskell): Like the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), I do not intend this afternoon to roam at large over the whole field of the Gracious Speech or to give a general survey of our economic position, which is sometimes done by the Chancellor of the Exchequer. My purpose in intervening in the Debate, after I have dealt with one or two of the more remarkable statements made by the right hon. Gentleman, is to concentrate on one major issue, and that is the cost of living.
However, before I turn to that. I must reply to some of the things which the right hon. Gentleman has just said. He asked me a question about the implications of the rearmament programme for the engineering industries. I can tell him that, broadly, the figures he gave us are not in dispute. As far as we can see, for the engineering industry overall, the increase will be of the order of 10 or 15 per cent. of its output, but he will appreciate that the proportionate effect will be different in different parts of the engineering industry.
The right hon. Gentleman made some allegations about our attitude to the rearmament programme which were entirely unjustified, and he must have known they were unjustified if he listened to my speech in September or read the statement of the Government early in August. He suggested that a programme of £3,600 million was deliberately put forward by the Government as something which it would be possible to carry without too much trouble; that we had, as it were, evaded our responsibilities in this matter. But he knows perfectly well that when the Americans approached us at the end of July they asked us what we could do on the assumption that our economic recovery would be maintained. We made it perfectly plain, at the time, that the figure of £3,600 million was what we believed to be the maximum possible, given two conditions in particular—that


we should not direct labour and that there should be no requisitioning of premises. I do not know whether the Opposition are now saying that we ought to start directing labour and to start requisitioning premises. If not, I fail to see the purpose of the intervention at all.
The right hon. Gentleman also implied that we wished to give the impression that despite the rearmament programme, business as usual was possible. Here again, I fail to understand exactly what he means. He said a little earlier in his speech that he thought the engineering industry could very easily take care of the necessary 15 per cent.

Mr. Lyttelton: I did not say "very easily."

Mr. Gaitskell: Very well; the tight hon. Gentleman thought it was quite possible within their capacity. Is he suggesting that we ought to go beyond that figure? If not, what is the purpose of the intervention? He must not be allowed to make bad blood once again between this country and the United States.

Mr. Churchill: Perhaps the Chancellor of the Exchequer will remember the description of the United States which his hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) once gave?

Mr. Gaitskell: I have heard some peculiar descriptions of foreign countries from various sides of the House, at different times, but I personally deplore the introduction into our Debate of matters which are, surely, above party controversy.
I must say that the position as far as "business as usual" is concerned, is perfectly clear. We take exactly the line as expressed very clearly by President Truman. It is not a case of "business as usual" and it is not, on the other hand, a case as yet—and we hope it never will be—of converting ourselves to a complete war economy.
The right hon. Gentleman also made some extraordinary statements about the housing programme and investments. He seemed to suggest that an extra 100,000 houses could be obtained by giving up a few things—technical schools, I think it was. How many more houses does he

think we would get if we stopped building any technical colleges whatever?

Mr. Lyftelton: I am sure the Chancellor would not wish to mislead the House. I made it perfectly clear that there were some of the lower parts of the capital investment programme which would have to give way to housing. Hon. Members opposite know what capital investments mean. There are some industrial capital investments which will have to be deferred.

Mr. Gaitskell: I am very interested to hear the right hon. Gentleman say that. He has not said how he will identify those parts or how to prevent those investments taking place. Perhaps he will consider whether it is necessary to use certain controls in order to do it.
If these extra houses are to be obtained it is not a matter of stopping the building of a few technical colleges or a few schools, though, heaven knows, there is a shortage of school accommodation, with which, I should have thought, hon. Members opposite would have been familiar from their own constituencies. It is a matter of stopping power station construction, of stopping the building of oil refineries—[An HON. MEMBER: "Government offices."] Do hon. Members really suppose that, if we stop the power station programme and stop the building of our oil refineries, we shall really have the economic potential which is obviously essential as a basis for our defence programme? The whole approach of the right hon. Gentleman on this subject is totally unworthy of him in particular, because I have always understood that at least he was a staunch supporter of the need for pressing on with industrial investment. It is no use talking about the top part and the bottom part. He has not told us exactly how he would weed out what he alleges to be unnecessary industrial development, and until he does that nobody will take him seriously.
I want to refer to one thing which was said by the right hon. and learned Member for Montgomery (Mr. C. Davies). He asked me if I would deal with the Torquay Conference. I cannot do that, but my right hon. Friend the President of the Board of Trade hopes to catch your eye later, Mr. Speaker, and he will no doubt touch on that matter. I would, however, remind the right hon. and learned Gentle-


man that, so far as the development in world trade is concerned, the figures published recently in our balance of payments White Paper show the remarkable extent to which trade has developed, particularly between this country and other European countries, a point to which he referred.
The first thing that I should like to say about the cost of living is this. It is not necessarily true that if prices go up we are all worse off, or that if prices go down we are all better off. What matters in determining whether we are better or worse off is how much we can actually buy, and that, in turn, depends not only on the prices of the things we want but also on how much money we have to spend. I can think of no clearer example of this than the period, still familiar to millions of men and women, of the great depression in the early '30's. Between 1929 and 1932 the cost-of-living index in this country fell by about 18 per cent. Those with fixed incomes undoubtedly benefited, but no sane person could possibly say that the country as a whole was better off. There was, of course, heavy unemployment and a sharp decline in the total national income, and if some people did better, as they certainly did, many others, indeed far more, were worse off.

Mr. Churchill: We had no help from the United States then.

Mr. Gaitskell: I do not think that has any relevance whatever to the economic situation of 1930.

Mr. Churchill: 1930?

Mr. Gaitskell: I am talking about the years 1929–32. The acoustics are surely good enough today, are they not?
Perhaps I may now turn to the present situation. The first thing is to get the facts right. We cannot have any sensible discussion on this problem until we have the facts before us. There is a lot of talk about an increase in the cost of living, about the rise in prices, but it is obviously impossible to deal seriously with this subject unless some attempt is made to measure more or less precisely what has, in fact, been happening. The plain fact is that the only way to do this at all scientifically is through the use of some measuring rod which reflects the price changes in an accurate manner. I think nobody will dispute that.
The index used for this purpose is the so-called interim index of retail prices. It has come in for a good deal of criticism lately. I see the right hon. Member for Woodford (Mr. Churchill) laughing, and no doubt he has in mind some criticisms himself on that score. He had better wait and hear what the answer is. Some people, indeed, have implied that this index is a completely useless affair. I make no apology, therefore, for devoting some part of my speech to explaining to the House just what the index attempts to measure and how the measurement is done. It is important, first of all, to understand what it purports to be.
It is a cost-of-living index, not for the whole community, but for the majority of the community with incomes below a certain level. Recently one of these Oxford economists with whom the right hon. Member for Aldershot (Mr. Lyttelton) was concerned just now—not one who is a Member of this House—Mr. Dudley Seers of the Oxford Institute of Statistics, estimated that from 1938 to 1949, for what he called the working class, the cost of living rose by 82 per cent., and for the lower middle class by 85 per cent. The rise in the upper middle class, those with incomes over £500 a year in 1938, was 113 per cent. I give that point as an illustration of the obvious fact that it is really irrelevant to criticise the present cost-of-living index as a measure of something which it does not try to measure at all.
The principle which the Ministry of Labour follow in constructing this index is to select a collection of things on which working class consumers spend their money—different kinds of food, rent and rates, clothing, fuel and light, household goods, drink and tobacco, fares, bicycles and so on. I may say that the index includes such individual items as tennis rackets, garden forks, perambulators, sewing machines, soft furnishings, brushes and brooms, soap and soda, saucepans and kettles. There are, in fact, 250 items altogether in the index.
The idea which is frequently spread about, that this index is only concerned with the bare necessities of life, is simply not true. Changes in any of these items will, of course, affect the index, but obviously they will not affect it to the same extent. The principle which one must adopt is to attach most importance to


those articles on which most money is spent, and it may interest the House to know that in this index the weight given to food, for example, is 35 per cent., to drink and tobacco 22 per cent., and to rent and rates 9 per cent. Hon. Members can compare that with the experience in their own constituencies and see whether they think that is very far out.
The weighting has been criticised on the ground that it does not really represent the way in which people spend their money, and it is true that it is based on a survey of consumption of working people in 1937–38. It is obviously desirable—surely nobody contests it—that the index should be brought up to date, and not, incidentally, left for over 30 years as the last one was. But we should be making a mistake if we assumed that the pattern of expenditure had changed very radically now as compared with prewar. It is true that it changed very substantially during the war, for the simple reason that there was not much to buy and consequently money was canalised in certain directions, but during the past year or two there is every sign that the tendency has been to return to the prewar consumption pattern.
For example, proportionately less is being spent on beer, entertainment and travel, and more on food, clothing, and household goods. We have made efforts to check up on this point because it is a matter of importance. These alternative methods suggest that the index is not very far out, so that without claiming perfection—we cannot get perfection in this matter—I am bound to say that despite all the criticism, and looking at it objectively, the index is not likely to be far wrong in its attempt to give us an accurate picture of changes in the trend of retail prices.

Mr. Churchill: Has any attempt been made to carry on the old index as well as to make the new one? It is a great shock in these matters to have a break in continuity. The right hon. Gentleman said that the last index had been left for 30 years. He also said that there had been little or no change, but, on the other hand, I gather that there was not so much need for a change. His argument was that there had not been a very great change as between pre-war consumption and consumption at the present time.

What I want to know is: Is there any means of checking the present index with what the figure would have been according to the principle of the old index?

Mr. Gaitskell: I think the right hon. Gentleman has slightly misunderstood me. What I said was that the present index which began in 1947 was based upon the expenditure in 1937 and 1938. It replaced the index which was based upon expenditure in, I think, 1909. Of course, it would be perfectly easy to extend the old index, but it obviously gives a far more imperfect picture of the position than the new one.

Mr. Churchill: It would be a very valuable check because continuity is so essential to a basis of comparison.

Mr. Gaitskell: It might give continuity in this matter but at the expense of accuracy, and it is rather more important to stick to the accuracy.

Mr. Osborne: Mr. Osborne (Louth) rose——

Mr. Gaitskell: I am afraid I must get on with my speech, if the hon. Member will forgive me. So much for the index. I hope the House will forgive me for having gone into the matter in some detail but I think these facts should be on record.
What of the movements of the index? What do these movements show? After devaluation, it was very generally assumed that prices would soon turn sharply upwards, and I am bound to say that the Government were much taken to task because of their alleged complacency on this matter. As one commentator has admitted, all the forecasts as to the trend of retail prices made a year ago, at the time of devaluation, have gone badly wrong—all, if I may say so, except those for which the Government were so freely and severely castigated.
Speaking over a year ago, my predecessor suggested that the retail price index might rise by a point or so between September and the end of the year, adding that
next year the rise in prices of imported metals and materials will gradually have some further effect on the prices of goods in the shops, clothing, kitchen equipment and so on, and that some further rise in food prices might, during next year, add another few per cent. to household bills.
What has happened? Exactly what my predecessor forecast. There was a one


point rise in the index between devaluation and the end of the year and, since then, another increase of one point has taken place. The rise in retail prices over the last 12 months has been two points and this, surprising as it may seem to all of us, contrasts with a rise of four points in the previous year and seven points in the year before that.
It is, therefore, quite clear that in these last 12 months the rise in prices has, in fact, slowed down substantially—[Laughter.] I suggest that when they have finished their laughter hon. Members should give some serious consideration to this problem and try to see whether they can deal with any of the arguments which I have been putting forward.

Mr. Drayson: Mr. Drayson (Skipton) rose——

Mr. Gaitskell: I mean, in the course of the Debate—not now.
It is worth comparing the changes in prices in this country, as shown by the alternative method to which I have referred, with what has happened in other countries since the war. This method is based on post-war spending habits—that is, on the total amount of spending and the quantity of goods and services received in return. For example, whereas between 1945 and 1949 the increase in retail prices in the United Kingdom on this basis was 20 per cent., it was 32 per cent. in the United States of America, it was 35 per cent. in Canada, it was 26 per cent. in Australia and it was no less than 105 per cent. in Italy. I must say that, in the face of these figures, I find it difficult to take seriously those who solemnly argue that in a free economy one can keep prices down more easily.
If one takes the last 12 months, from June, 1949, to June, 1950, the rise in the United Kingdom of two per cent. has been the same as the rise in the United States of America, despite the increase in import prices here following devaluation, while in Australia the rise has been 9 per cent., in South Africa 6 per cent., in Denmark and New Zealand 5 per cent. and in Canada 4 per cent. If we take food prices, the comparison is even more striking. Between 1945 and 1949—[Interruption.]—I am afraid hon. Members opposite must stomach a little of this medicine——

Mr. Braine: Mr. Braine (Essex, Billericay) rose——

Mr. Gaitskell: Between 1945 and 1949 food prices in France rose by 381 per cent., in Finland by 214 per cent., in Italy by 100 per cent., and in many other countries by more than 30 per cent.; and in the case of the United Kingdom the increase was 25 per cent. I freely concede, of course, that an important part in this was played by the maintenance and, indeed, the extension of food subsidies, and I understand that the Opposition, who argue that the policy of bulk purchase—a subject to which I shall return later—has been disadvantageous to us, will, perhaps, have some difficulty in explaining those figures away.
To return to the situation at home. It may well be asked whether the conclusion which I have drawn—that in the year after devaluation retail prices rose by only half as much as in the year before that—is borne out by any other evidence. I submit that it is. In fact, the picture in the last year or two has been broadly one of higher productivity accompanied by higher earnings and still higher consumption. Another suggestion that living costs have become so high as to prevent the mass of the people from taking advantage of the larger output of goods finds no support whatever in the available evidence.
Here is the evidence. I am talking about the total increase in consumption and I have here figures which are quantities, not values. In 1949 the total food consumption was 13 per cent. higher than in 1946, and 38 per cent. more durable household goods and 23 per cent. more other household goods were bought. An increase of 32 per cent. took place in clothing sales. Even in the first half of this year this trend has continued, with a 4 per cent. increase in food consumption and a rise of no less than 10 per cent. over a year earlier in purchases of household goods.
I can well imagine that some hon. and right hon. Gentlemen, and very likely some newspapermen, too, who may read this speech, would, so far as it has gone, interpret it as an effort by the Chancellor of the Exchequer to prove that all the talk about the increase in the cost of living is illusory and that there is no need to worry at all. That is not so. That is not what I am trying to do. What I am


trying to do is simply to get the facts right, as far as things have gone up to now. Nevertheless, I must admit that there is a contrast between the facts as they are presented by a scientific study of what has actually been taking place and the widespread feeling that here is a very serious position—that prices have risen and that it is much more difficult to make the money go round. I venture to suggest to the House that there are several things by which this contrast can be explained.
In the first place, I would refer again to what I emphasised at the beginning; that what matters is not only prices but also wages and other forms of income. It is, of course, a fact that during the past year, while prices have also not been rising so quickly, wage rates have moved scarcely at all and earnings have not moved up as fast as they were moving two years ago. For example, the average weekly earnings over a wide range of industry increased by 11s. 6d. between April, 1947, and April, 1948, but, in the following two years, after the appeal for wage restraint, they increased by only 5s. 4d. and 4s. 9d. respectively. Of course, I must add that this slowing down was exactly what my predecessor asked for and it has played a major part in enabling us to achieve an utterly remarkable economic recovery.
To suggest that it has meant a decline in real income is, again, simply not borne out by the facts. The right hon. Gentleman talked about devaluing the worker. I am afraid that I shall now have to do a little devaluing of him. Here, again, are the facts. From 1947 to 1950 average weekly earnings increased by 20 per cent., while retail prices increased by 14 per cent. In other words, earnings were rising faster than prices.

Mr. Lyttelton: May I ask the Chancellor whether the object of this argument is to show that there has really been no increase at all?

Mr. Gaitskell: The object of the argument is perfectly clear; it is to give the truth about the cost of living and how far it has increased. It is quite true that the increase in weekly earnings was faster in the years 1947–49 than it has been in the later years. But it remains true that

in the last year it has, in fact, kept pace with the increase in prices. I must say that some of the present talk about the hardships of consumers is just one more example of that rather low form of irresponsibility which at one moment calls for strict economy in financial policies and in the next does not blush to make party capital out of its results. The list of examples of this kind of thing is quite a long one, and it has had some eminent and distinguished contributors.
Another reason, I believe, for the general attitude towards the cost of living is the very human and natural tendency to ignore any cases where prices fall, and to think only in terms of price increases. For example, certain newspapers ridiculed the report of a price fall between July and August this year; but the index was perfectly correct, I think, and accurately represented seasonal reductions in the prices of potatoes as well as——

Mr. Harold Macmillan: Apples and oranges.

Mr. Gaitskell: Yes, apples and oranges. It represented reductions in the prices of some kinds of vegetables other than potatoes which were also lower in July. The only price increases in that month happened to be very small and unimportant ones.
Another fallacy I must mention in trying to explain this contrast which I have mentioned, and one into which all of us in a sense tend to fall, is this. We attach exceptional importance, I suggest, to the prices of the things which, in absolute terms, when we buy them, cost us a lot of money. For example, if, when we buy some curtain material to replace, perhaps, what we have had probably from before the war and that has lasted us for 10 years, we find that it has gone up by two and a half times in price, well, naturally, it is a very striking thing to meet, and it makes a very big hole in our pockets. We say, "Look, this is a very good instance of the way the cost of living has gone up."
But the fact is, of course, that we only buy things of this sort every few years, and the change, regrettable as it is, is slight compared with what happens to the prices of the things which we buy every day and every week—of bread, of meat, of butter, of margarine, of coal, of clothing—[HON. MEMBERS: "Of coal?"]


Certainly. Apart from a seasonal decline in coal prices this summer and a winter seasonal increase there has been no recent change in coal prices. Of course, this is only another way of saying that in the index which measures price changes, curtains and curtain materials, although fully represented, would play a very small part.
Finally, I think there is another reason why nowadays people feel stringencies which they did not feel in earlier years. It is the simple fact, to which I think the right hon. Gentleman referred, that there happens to be more to buy. When there was nothing much to buy in the shops people had plenty of money in their pockets, and the complaints, as we all remember very well, were about shortages. When more things that we all want to buy come on the market—well, my experience, at any rate, is that my wife presses me for more money to replace things—for instance, clothing, and says we ought to spend a little more money on clothes; and we find the temptation, of course, to spend more ourselves very much greater; and this creates a feeling—a very natural feeling—of stringency, that money is tighter and that somehow or other the cost of living is going up.
My last point is this. One is inevitably bound to talk in aggregates and in averages. One cannot make speeches about the circumstances of each one of the 10 million or the 12 million families in the country. One can only show whether people on the whole or on the average are better or worse off. But, of course, concealed in that average there is a wide variety of personal circumstances, and we certainly ought not to overlook the fact that some people with small, fixed incomes are worse off, and it is only natural that complaints are heard from those quarters. But the fact is that many more have not suffered, and there are——

Mr. Churchill: Mr. Churchill rose——

Mr. Gaitskell: May I just finish?—and there are people better off, though they say very little about it when they are better off.

Mr. Churchill: I am deeply interested—everyone is—in the argument of the Chancellor of the Exchequer. Would he, before he leaves it, come to the question of the purchasing power of the

pound sterling? [Laughter.] Hon. Members should not laugh. Is it a fact, for instance, that the pound sterling we have now is worth 16s., whereas it was worth 20s. in 1945? Or is it even smaller than 16s.? Surely that is one way of expressing it, in a way that is comprehensible? I hope the right hon. Gentleman will deal with it in those terms, as well as in these other terms in which he has been talking.

Mr. Gaitskell: I have already given the figures for the rise in the retail prices of this country, which one estimates roughly—there is the problem of continuity, to which the right hon. Gentleman referred—at 20 per cent., and, therefore, it is true that 16s. is the right figure. But I must repeat what I said earlier, that there has been certainly as large a rise in incomes since then—in wages and other incomes. The increase in the national income, I think I am right in saying, is about £1,600 million between 1945 and 1949.
The next question, of course, that comes to one's mind is, what we may expect from the future. But before I turn to that I must deal rather more fully with the underlying, casual influences which are at work. I do not think there is any doubt whatever that the inflationary tendencies which have been operating recently spring directly and wholly from the increase in the prices of raw materials we import, due partly, I agree, to devaluation, and partly to the general increase in the level of income and demand throughout the world, and especially in the United States, and finally, since the middle of this year, to the outbreak of hostilities in Korea and the speed up of defence expenditure which has followed.
The result has been, of course, rising prices and threatened shortages. In the three months from mid-June the price of rubber has risen by nearly 70 per cent.; of tin by 30 per cent.; United States cotton by 20 per cent.; merino wool by 50 per cent.; crossbred wool by 90 per cent.; aluminium and copper by nearly 10 per cent.; zinc by nearly 20 per cent.; lead by over 30 per cent. These changes have already begun to affect the general level of wholesale prices which in the case of the United Kingdom reached a new high level in September. But we may still record that the rise here has been mitigated by the fact that the prices of


home produced materials, and commodities made from those materials, which still constitute 60 per cent. of the index, were fairly steady.
What are the implications of these facts for the Retail Index, for the cost of living? All that can be said with certainty—I do not disagree here, I think, with what the right hon. Gentleman said—is that when wholesale prices continue to rise sharply retail prices will eventually move in the same direction, but there is no reason why they should move so fast, and the time lag will by no means be the same, obviously, for all articles. The Wholesale Price Index covers mostly materials, while the Retail Price Index is, of course, only concerned with finished articles, and it is obvious that only part of the cost of the finished articles is to be ascribed to raw material prices; and consequently from that increase one would naturally expect a much less proportionate increase in the cost of the final product.
Just how much the Retail Index will rise it is difficult to say, but I would venture this suggestion. At the end of September, 1950, it stood at 113.9; for October it will probably be 115; between now and December the increases in wholesale prices will tend to work themselves into the retail prices, and it is quite probable that by the end of the year the index will have risen by a further point to about 116.

Mr. Osborne: What will that bring the pound to?

Mr. Gaitskell: It means an increase of three points—about 3 per cent. The hon. Member can work it out. I have no doubt that the hon. Member will probably be putting one of his familiar questions on the subject before long. We shall give him an accurate answer. I cannot make any reliable forecast, except to say that we shall certainly not have been seen by the end of the year the full effects of the recent increases in raw material prices which have taken place during these last six months.
I have no wish to be an alarmist, and indeed, as the figures I have given will show, we need not expect that there is bound to be a wild inflation, but it is obvious that the impact of these increases in raw materials prices on our economy in the next year or two is likely

to be pretty serious. In these circumstances, of course, the question arises: What can we do about it? What steps can be taken to check inflation and, so far as possible, protect the standard of living? In the first place, it is obviously desirable to do everything we can to limit the increase in the raw materials prices. This is, however, a matter which does not lie within our own power. All we can do is to seek agreement with other countries which are involved on effective measures to bring about this result.
I may say that this increase in raw materials prices is a matter which is causing the greatest possible concern not only to ourselves but to many other countries, particularly in Europe. The first steps have already been taken by O.E.E.C. A month ago we agreed that the organisation should make an immediate survey of the situation, tackling it commodity by commodity—our representatives of course taking part in those inquiries—and make recommendations to the Council, which they will do at the next meeting, as to what further action should be initiated.
While both the O.E.E.C. and the North Atlantic Treaty Organisation have a major concern in this, it is clearly not possible for effective action to be taken to deal with these difficulties without consultation with the major producers and consumers in other parts of the world. It is obvious, too, that there are a number of cases in which the main producers, and consumers for that matter, are not European countries. Where they are European countries it may be possible for the necessary action to be taken within O.E.E.C. itself, but in most cases I am afraid it will be necessary to deal with the problem commodity by commodity and to make suitable arrangements for consultations with the main producers and consumers in each case.
I must say in this connection that I have been mildly astonished to find the Conservative Party still talking as though bulk buying were the cause of the increase in prices.

Mr. Churchill: A cause.

Mr. Gaitskell: A cause of the increase in prices. I have been perhaps still more surprised that its abandonment is supposed to be the way to cause prices to fall. I can only wish that the right hon. Gentleman and some of his hon. Friends


could be with me when I am faced, as I have been from time to time, in Paris with complaints from other representatives at the O.E.E.C. Council meetings about the unfairly low prices at which, so it is alleged, we are able to purchase our supplies of foodstuffs, in particular from other countries in Europe, because of a Government monopoly in purchasing. I would find their support most valuable in rebutting these accusations. Indeed, I really cannot understand how this passion for free competitive enterprise can possibly be reconciled with the demand now being made by countries with economies, which can certainly be described as free liberal economies, for urgent United Kingdom action to stop what free private speculative enterprise has quite clearly been bringing about.
We shall therefore do our best, in full co-operation with our friends, to tackle this problem at the source, but I cannot pretend that it will be easy. There are conflicts of interest here which cannot be ignored, and there are very real technical and administrative difficulties. But both in the interests of our defence programme, and indeed our economic recovery as a whole, we must tackle it.
While the basis of this explanation about what the Government are doing to try to secure international action on raw materials is the problem of price increases, I must here say a few words also about the question of supplies. The right hon. Gentleman referred to labour difficulties. At the moment I have nothing further to say on that subject than what I said in the defence Debate, but on materials I would just say this. It is, I am afraid, clear enough from the course of prices that the position has deteriorated in the last six weeks. If shortages develop we shall have to reimpose controls in order to ensure—and we are very glad to have so many converts on the other side of the House—that first things come first: defence, exports and essentials for the home market. We shall not hesitate to do so. But there is the very real danger, of which I must give warning, that if shortages do develop there may be most serious consequences on the increasing productivity on which we are relying as the vital foundation for our whole hopes of the maintenance of our economic recovery and the speedy execution of our defence programme.
So much for import prices, the increase in which has been, as I have said, the major influence at work. The question now arises: Can we be sure that prices may not be pushed higher by developments at home? Or can we do anything by action at home to modify or check, or even offset, the increase in import prices? It is inevitable and natural that the increase in the cost of living resulting from high import prices following the longish period of stability should lead to increased pressure for wage and dividend increases. It is common knowledge that a number of claims for wage increases are now being made, and it would be too much to expect that the remarkable stability of wages over the last 12 months can be continued indefinitely. Equally, I may say, we must recognise that there is a disinclination in some quarters to accept the indefinite control of dividend limitation.
It is surely evident that if the increases take place on anything more than a moderate scale they will have the effect of pushing up prices still further, which in turn will very probably precipitate still further demands for higher money incomes. Unless, therefore, quite unexpectedly, import prices fall again, this really means that the increase in wages should not go beyond what is justified by increases in production, after allowing for other claims, especially the claims of exports and defence. We do not yet know just how big the final defence burden will be, but it will certainly be heavy. As for exports, we may perhaps secure some offsetting here if export prices begin to rise more rapidly and the volume of exports needed to pay for increased imports is therefore reduced.
The rise in incomes therefore, must be kept within bounds, and I must warn the country that if this is not done we really are running grave risks. There are, if I may say so, two possible developments, to some extent alternative, which will then face us. First, and most obviously, there is the straightforward danger—relatively straightforward, shall I say—of internal inflation. Here let me underline how cumulative this process can be. Wages, salaries and other incomes rise too fast; prices go up because of the higher cost of production; this in turn produces further demands for increases, as I have just said. At the same time, if there is a general impression that prices are going


to go up, and go up continuously, savings will tend to decline, and to the rising costs on one side will be added a still greater increased monetary demand on the other. In these circumstances the plight of those with small fixed incomes clearly becomes more and more serious.
The other danger is to our trading position. No doubt as a result of higher demands at home more would in these circumstances, as I have just described, be sold at home and less exported, and for the moment, of course, such a pull back from exports into the home market would relieve the inflationary pressure, but only at the expense of equally serious consequences. The total of exports would then begin to fall just when it ought to be rising to pay for the dearer imports we have to buy. We should again be threatened with a serious deficit in our balance of payments. To avoid it we should again be forced, no doubt, to cut imports. Not only would the standard of living suffer, but we should have to start putting workers on short time, standing them off through shortages of raw materials. No one, certainly no industrial worker, would be exempt from the harsh and bitter effect of this development. All this, I underline, is still no more than a remote danger, but it is one of which I felt it my duty to give the House warning today.
If any one class or any particular group of the community attempts to shelter itself by obtaining higher personal incomes than its due share of any increase in the national output, the benefit will be obtained at the direct cost, first, of other classes or groups, and then, as inflation develops, at the expense of the whole nation. Higher incomes, unaccompanied by increases in production, will certainly lead to higher prices; and higher incomes in one group will lead to demands for higher incomes elsewhere, which, in turn, will lead to higher prices for every one. This is the simple expression of the fact I have just mentioned, that we cannot by manipulation of personal incomes get more out of the national product than is available. I ask that every one concerned will weigh these words and their meaning for the workers and the whole community.
Rising prices may develop not only through import prices, not only through cost increases at home, but also through

a greater pressure of consumer demand. Here the Government certainly has a greater measure of power and responsibility. It is its duty to take all possible steps to see that its own actions do not generate inflationary pressure. Indeed, it must, as far as possible, so control through its budgetary and credit policy, the flow of money as to reduce pressure, provided this does not of course lead to unemployment. The policies pursued by my predecessor were, of course, designed precisely for this purpose. In a series of courageous and unpopular Budgets, he followed firmly the principles of disinflation.
The House will not expect me on this occasion to enter into details, but I am sure that we must accept the necessity of continuing the general lines of this policy. We shall, therefore, need to continue all possible economies in public expenditure. But what we are not prepared to do is to help those who are better off to get more by way of purchasing power or by reduced taxation by driving those who are very poor out of the market altogther.
The Opposition and the right hon. Gentleman today talked much of reducing public expenditure. Well, the right hon. Gentleman has given us some suggestions—the suggestion that the Ministry of Civil Aviation should be abolished. This was his great contribution to the Chancellor's next year's Budget. He did not, of course, tell us whether or not the subsidies were to be continued to the airways. He did not, of course, tell us just how the management of the airfields was to be conducted. No doubt, on some future occasion, we shall have more light on this subject. Even if the Ministry were abolished and no extra corresponding expenditure were made elsewhere, including the subsidies, the total saving would be £14½ million. [Interruption.] I mean not including but excluding the subsidy of £6 million; the total saving would be £20 million altogether.
As for the Central Office of Information, the right hon. Gentleman did not, of course, tell us whether he wished them to stop all the foreign and mostly anti-Communist propaganda on which by far the greater part of their budget is spent. If he is concerned with the home market, the figure is completely negligible. I do not know if he was really serious in suggesting that at this moment the Ministry


of Supply should be reduced. At the moment, when we are trying to carry out the defence programme, I should have thought that it was a rather difficult operation to combine the two. Of course, we hear the usual thing—a few odd economies here and there which one can easily dispose of, and nothing serious is put forward.

Mr. Lyttelton: What about the nationalised industries?

Mr. Gaitskell: The nationalised industries are certainly not costing the Exchequer very much at the moment, except Civil Aviation. Right hon. Members and hon. Members opposite will have every opportunity during the debates on the Estimates to suggest economies in public expenditure, which do not amount to redistributing income to the disadvantage of the poor, and I hope that they will pay attention to this sort of economy.
As for the food subsidies, I can conceive no quicker way of putting up prices still further than by slashing these. It is indeed difficult to understand how the Conservative Party can possibly reconcile their campaign for a reduced cost of living with the proposal to cut subsidies. Perhaps it is yet another example of what the late George Orwell in his book, which hon. Members may or may not have read, entitled "Nineteen Eighty-four" called "double speak." It is clearly necessary to control investments strictly, but while monetary policy can play its part here, it would be completely impossible to impose the necessary priority, to see that the most important jobs are done first, without the use of physical controls and in particular of building controls. I welcome the conversion of the right hon. and learned Member for Montgomery (Mr. Clement Davies), who so violently attacked our policy of controls the other day, to our point of view in this matter.
In addition to maintaining a disinflationary policy generally, it is also essential that, so far as possible, price control should be effective. It is indeed certain that without the price control measures which we have had in force in the past five years, the cost of living would have risen substantially more. I am not, of course, saying that price control can be used to protect consumers against the consequences of world price increases for raw materials, but what it can do is to

ensure that prices are kept down to the minimum level consistent with the maintenance of adequate supplies and satisfactory distribution of the essential consumer goods.
In some form or other, price control now operates over a large part of the field of consumer goods, but, as we all know, it is far more effective in the case of utility or quasi-utility goods, where more or less precise specifications can be laid down. Here again, the need for control is apparent. It is the Government's intention to see that a sufficient supply of carefully price-controlled utility articles continue to be supplied and to use the controls necessary for this purpose.
So far as food is concerned, the retail prices of the basic rations of food are, of course, largely conditioned by our subsidy policy, and the retail food price index has not moved much in recent months. It was one point higher in September than in March. Moreover, with the change in the economic climate which has recently occurred we have decided to suspend some further measures of decontrol which might otherwise have been introduced, and to review those price controls, both in the food and Board of Trade field, which have been relaxed to see if it is advisable to reimpose some of them.
Finally—in addition to international measures on raw materials, a strict budgetary policy, the maintenance of food subsidies and strict price control—it is, of course, necessary to press on with every possible measure for improving efficiency in manufacture and distribution. I realise, of course, that the subject of increasing productivity and efficiency has become "worn coin." But the coin still rings true. Indeed, the very fine record of British industry in this respect, in the last year particularly, is an indication of what really can be done in this field.
I trust, therefore, that none of us whether engaged in industry or commerce, will allow himself to forget the paramount importance in present circumstances of an even more intense concentration than before on the achievement of better results at lower costs. The more we do this, the more we can offset by our own efforts the consequences of rearmament on the international commodity markets and the world tides of inflation


which now threaten the ramparts of our economy.
I have tried in this speech to give the House and the country the true facts about the rise in the cost of living. I have given warning of what may lie ahead, and I have not disguised my anxiety on this score. I have also shown what must be done by the Government, and what must be done by the country, if we are to avoid inflation. By international agreement on raw materials, by a strict, but fair, budgetary policy, by the method of food subsidy and price control, including its re-imposition where necessary—by the use of other controls designed to keep expenditure in check, by encouraging productivity and saving in every possible way, the Government can certainly do a great deal to check, limit and even off-set these higher prices that come upon us from outside.
But, these policies must be accompanied by a general understanding in industry and in the country generally of the need for moderation in income claims, by a willingness to see the other man's point of view, and by an appreciation that the pursuit of purely sectional interests in an irresponsible manner without regard to the effects on the rest of the country, can be disastrous. Provided this is so, I am confident that with the record of a great industrial and economic recovery behind us we can face and overcome our difficulties.

5.1 p.m.

Mr. David Eccles: The Chancellor has put us in a very interesting position. He has described certain facts about the cost of living, and he has defended the official index, which records that the depreciation in the value of the housewife's pound is only 2d. over the last 12 months. I think that this will be an astonishing statement, not only to the great bulk of the spenders——

Mr. Gaitskell: Perhaps I might correct the hon. Member's arithmetic. I make the figure 4d.

Mr. Eccles: If it is 4d., I am obliged to the right hon. Gentleman, but the point is that it is a very small rise in the official index. Not only must this be a surprise to the country, but it must be a great surprise to the Lord President of the Council, because he devoted part of his

broadcast to trying to explain to the country why it was that the cost of living had risen. Surely, he would not have troubled if he held the same view of the situation as the right hon. Gentleman. His duty would have been to denounce the rise as a bogy, showing that all the fuss there is now is founded on a misapprehension of the facts.
I am bound to agree with the Chancellor that it is surprising retail prices have so far moved so little. One reason for that is that the Board of Trade, through the price control machinery, did not allow traders to raise prices when devaluation of the pound put up the cost of their raw materials. In other words on Government instructions they have been selling at below the cost of replacement. That must, of course, have eaten into their capital, but I will not discuss the merits of that now, although I think it is a very doubtful economic policy to force people to sell goods below the price at which they can be replaced. It certainly means that the rise of the index figures following devaluation, after this period of stability, will be concentrated in the next 12 months, which is what the Chancellor warned us would happen.
There is another reason why retail prices have not advanced as much as the rise in wholesale prices would indicate. It is that in the last three years productivity, and the general volume of production, has been increasing quite substantially, but the Government had to impose, or persuade the wage earners to accept, a wage freeze, because the size of the Budget—that is, the Government's own spending—was such that they could not allow the producers to get the share of the additional output they ought to have had. The stocks in the shops increased, since Government spending did not take up this extra production. We would have had a fall in prices but for devaluation, and this condition of affairs acted as a second break on the rise.
It has always been my view—I have said this before—that we should not have had the wage freeze as we have had it over the last few years. It is a bad thing to hold back a whole series of wage claims with the result that they finally burst out all together. We then get a much more intense infection as between one wage increase and another, and we find our stability affected much more than


if the increases had been gradual. We have had to have a wage freeze because the Government chose to spend such an extravagant proportion of the national income. It was the only way temporarily to hold prices. That leads me to consider what can be done through the Budget to restrain the present rise in prices.
The right hon. Gentleman himself has told us that when a general impression gets about that there will be a considerable rise in prices, it has a very serious effect, and that we must try to meet this in advance. He was forced to give us today this general impression, saying that the rise in the cost of raw materials, added to the wage increases that we know are to come, will cause a much steeper rise in the coming three or six months than during the past 12 months. It is certainly the duty of both sides, since this general impression is well-founded, to see what we can do to mitigate the effects.
The Budget is bound to call for larger sums of money over the next few years from foreseeable automatic causes. By that I do not mean only re-armament. National Insurance is bound to go up as the population gets older, and the cost of education is bound to increase. There is also the cost attributable to wage increases—I am sure there will have to be wage increases for Government employees. The general effect will be that the present rate of taxes levied on the increasing volume of production will hardly finance the automatic increases in the Budgets we must expect. That is very serious, because it means, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) said, that we have no reserves of taxable capacity.
My right hon. Friend mentioned that Sir Stafford Cripps had said that there was a reserve of Income Tax, and I want to ask the Chancellor specifically whether he believes that there is a substantial reserve of taxable capacity anywhere in the country today. Such a reserve is, in my judgment, as important for defence as having a reserve of trained men for the Armed Forces. I do not say that entirely on my authority. If hon. Members will consult the Budget speech of Mr. Gladstone in 1853, they will find that he said something which is as applicable today as it was then. He said:

Much as may be said of the importance, in which I concur, of an Army and Navy reserve, I say that this fiscal reserve is no less as important. It is an instrument with which, if the time comes, you may defy the world.
Having no taxable reserve is one of the main reasons why the Government today cannot stand up in the world and have their own policy, but have to tag along behind the United States. They have destroyed their power to embark upon new expenditure and policies. It is not full employment by itself which causes the chronic rise in prices; it is full employment and maximum taxation at one and the same time. I am sure that we could have full employment at a considerably lower rate of taxation and keep our prices steady, but if we have Budgets of this size and full employment, there is nothing that I can see short of physical controls of every kind and description, including direction of labour, price control and raw material control, which can possibly hold the prices where they are. I think it would even fail at that.

Mr. Crossman: If the hon. Gentleman is right in his argument that the main cause of rising prices is that we are overtaxed, why is it that other countries which tax themselves less are suffering from the same price rises?

Mr. Eccles: There can be no comparison without going into full details of what the other countries do. It is not possible to compare one country's economy with another's without going through the whole range of expenditure by different sections of the community. What causes prices to rise is a total demand greater than the goods coming on offer. In one case, as here, it may be the Government that is pushing that demand and in another it may be the speculators, so dear to hon. Gentlemen opposite.
Could we get the size of the Budget down? I want to make a few remarks upon that. It is always assumed by hon. Gentlemen opposite that unless one can name some great policy in action and say, "This takes £50 million a year and we will cut that off," it is not fair to say that economies can be made. For practical people like the British it is astonishing that we have forgotten the difference between good and bad management of money. Any hon. Member knows that he can go into two houses in his division which are similar—same size, same rent


and the same money coming in each week. One is as neat and cosy as the other is grubby and bare. What is it that makes the difference between the well-furnished house and the other? Why is it when we enter one we get a smell of a delicious meal being cooked, while when we go into the other we are repelled by "The fragments, scraps, the bits and greasy reliques," as Shakespeare says? It is only good management and it is all done on a few pounds a week. If such a difference can be made with so small a sum of money, what about a Government which spends £10 million a day? The idea that there cannot be enormous efficiencies and economies through better management seems to me to deny our experience of everyday life.
I want to give one or two instances of this taken from the rises in hospital costs. If we take a London teaching hospital with no more beds today than before the National Health Service came into operation, we find that the cost of maintenance has doubled. In some cases it is a little more, but on the average it costs twice as much to maintain today as it did before the Act came into force. There must be here some other cause for increased cost than the cost of supplies and foodstuffs, many of which are in the index which the Chancellor showed have risen so little.
The position is worse in the provinces, because the hospitals are not so well managed as the London teaching hospitals. This is proved by the cost. Many of the regional boards have made little or no attempt to organise the duties of their staffs or to consider how many staff they should have. I want to give one instance of this. The other day I was looking at the cost of The Royal Salopian Infirmary, Shrewsbury. That hospital had between four and five members on its finance staff before the Act came into operation. A few months ago the governors were worried because they had got 22 doing the same work for the same number of beds. They sent someone to look into it, because being a prudent body they were alarmed at the expenditure. They were able to dispense with 12 of those 22 and to come down to 10. I understand there is no difference in the efficiency of the work which is done. That example could be

multiplied throughout the administration of our hospitals today.
How does it come about? What is the cause of it? When the Socialists get hold of a public service they invent a whole series of grand new posts. In some of the smaller hospitals there used to be a man called a steward, who was an accountant and the buyer of goods for the hospital. This fellow has been drawn and quartered by Socialist management. He has been cut into two, and there is now a finance officer and a supplies officer. Each finance officer and each supplies officer has a deputy, which makes four, and each of those in their turn demand clerical staff, which means typewriters, office equipment, and very often new buildings in which to house them.
There was a time in the happy days of old when it was said that if you wanted to take on an additional manservant it was necessary at the same time to engage a housemaid to look after him. There is no more of that nowadays. But plus ça change, plus c'est la même chose. What was a personal and a private luxury paid for by the man who enjoyed it has become a public scandal today paid for by the taxpayers, who comprise the rich and poor alike. When the National Health Service Act became law, the people of this country thought that the Minister of Health was going to provide them with more beds for sick people. Instead he has made them pay for more desks and more typewriters. He has invented a monster which, like his own tongue, he is quite unable to control. I believe that if we go through the whole of this Service and through all Government Departments, it would not yield just a million or two but it would be vast sums of money that we should save.

Dr. King: Before the hon. Gentleman passes from the Health Service, may I ask him does he not know that the regional hospital boards consist largely of Conservative majorities, and that he is libelling citizens who have a common opinion with himself?

Mr. Eccles: I do not mind of whom the boards consist. If they waste public money, it is because the Minister has brought in a scheme under which money is put at their disposal, and the responsibility rests upon the Minister for giving them a blank cheque.
Something will have to be done to tidy that up. It may well be that with all these economies we still will not be able to foot the rearmament bill without sacrificing something in the Budget. Here I would say this to the Chancellor—does he not think that if the case were fairly put to the British people and choices given to them, that if they concentrated their resources upon rearmament and rehousing and two or three things which they really want, and for the time being gave up the frills, they would prefer that rather than go on as we are going, which means that the standard of living is going to fall and is going to be reduced by a general inflation, which, as my right hon. Friend said this afternoon, hits the poor people worst of all? The Government should have the courage to put that to the people.
I know it is not popular on platforms to have to say to people, "We are actually going to reduce this and that form of Government expenditure," because someone will be looking for another job. But is it not much more honest? Would that not be far more in the interests of the people whom the right hon. Gentleman and his friends pretend they represent, than that inflation should come at a pace that we can all see is increasing? I went to the Oxford by-election last night. It astonished me to see how the whole election turned on what one may term social insecurity. We used to hear the Labour Party arguing about social security, but now the whole argument is about the cost of living and the shortage of housing. It is a sad state that we have come to of social insecurity, after five years of peace and of a Government which promised so much.
It lies in the hands of the Chancellor of the Exchequer to improve the situation. No one would be more pleased than my hon. Friends and myself on these benches if he would take his courage in both hands and cut expenditure. He would release the negotiating machinery of the trade unions to do its proper job. As it is he has to utter vague appeals: "Do not put up wages by more than a few shillings," etc. That does not help the man who has to meet his trade union members to discuss a particular wage claim. The standstill worked for a short time, as when I take certain drugs to stop the common cold, but after about three

days the cold wins and is much worse. It might have been better to let matters take their natural course.
During the last three years the Government have chosen to spend too large a part of the production of this country badly and wastefully through their own services rather than to let the workers participate in their increased production. That was a bad choice; it has been overdone, and it is high time to put it in reverse. The general feeling that the cost of living has gone up is, as much as anything else, a reflection of the workers' half-conscious realisation that they have been swindled by the Government out of some of the products of their own labour, which they ought to have had.

5.23 p.m.

Mr. Crossman: I have been listening carefully to the right hon. Member for Aldershot (Mr. Lyttelton) and to the hon. Member for Chippenham (Mr. Eccles). One sentence in the speech of the right hon. Member rang true. He talked of "the wreckage of human hopes." For five years the Tory Party have hoped and expected that Socialist finance would be the destruction of this country, and for five years they have confidently predicted it. [Interruption.] I will withdraw the word "hoped" and use the word "expected." Each year they have confidently prophesied that this destruction would happen. At the end of each year we have a discussion and find that it has not happened, and we are told: "Ah! But it is going to happen next year."
It is a sad thing for them that, joining with the "Economist" and other distinguished papers, they should be unmitigated prophets of gloom for five years on end and have such very bad luck. This country has been through three major economic crises and, with a certain amount of luck, we should have foundered in one of them. We have not. Perhaps it has something to do with Socialist planning that we have not——

Mr. Boothby: Is it not a bit unfair to link the Tory Party with the "Economist"?

Mr. Crossman: The Tory Party say six months later what the "Economist" says today. The Tory Party learns slowly—but they do learn.
There is one point on which I think all hon. Members will agree. It is that we have had one common aim in the last five years—to make ourselves independent of American aid. I was surprised that there was no reference in the speech of the right hon. Member for Aldershot to the remarkable fact that we are now being asked by the Americans whether we can do without Marshall Aid because our recovery has been so astonishingly successful. I was surprised not to have heard just a little word from that side, where hon. Members are so keen that we should have good relations with America, recognising the Government's achievement in carrying out this recovery. We have succeeded in it, because we have been using that aid far better and far more systematically—again, perhaps, this has something to do with planning—than any other country in Europe.
It is, of course, an ironic tragedy that in this autumn, when we have become capable of standing on our own feet for the first time, rearmament should have arrived and should have put back that prospect for years and years. Here I come to a serious point made by the right hon. Member—his remark about the £3,600 million rearmament programme being something which this country could perfectly easily bear, something organised by somewhat disingenuous politicians who knew it was perfectly easy for the standard of living to be maintained and for us to carry that £3,600 million programme. That argument was not merely disingenuous but rather stupid. When the previous Chancellor of the Exchequer introduced that programme in September, he added a third condition which he did not mention today. Not only was it conditioned by a refusal to direct labour and requisition dwellings, but also, by the further condition, that the programme could not be carried through except with extensive dollar aid. A programme which we cannot carry through without extensive dollar aid is not some politicians' clever device, something so light that nobody will feel it.
Now, the trouble is that we have not got this dollar aid. I should have thought that it was a non-party matter for all Members of this House that we should get "fair shares in rearmament" among all the free nations, and that nothing

should be said from the other side of the House to imply that this country can carry through a £3,600 million rearmament programme without any dollar aid; but that is exactly what the right hon. Member implied in his speech. He said that it was clear that we should be able to carry it through without any effect upon any of our major schemes, whereas in fact, if we have to carry this through alone, the standard of living in this country will have to be slashed.

Mr. Lyttelton: I would ask the hon. Member whether the £3,600 million programme can fairly be described as "a rearmament programme"? The argument is a little distorted.

Mr. Crossman: Perhaps I should have said "defence programme." My point is that the right hon. Gentleman did not admit that it is only possible to maintain and carry through that programme with large-scale dollar assistance. What has happened during the autumn? The Americans have decided to finance the whole of the cost of the new French armaments. I do not begrudge it to the French. The Americans have decided that we are doing so well in this country that we do not need dollars. It is surely not very patriotic for the right hon. Member to give the impression to the American Congress that the isolationists there are perfectly right in saying that the British do not need any dollars, and that we can carry through our programme out of our own resources.
It seems to be the rule that one has to have a large Communist Party in order to get really generous American aid. On this point at least the Opposition ought to put party politics behind them and frankly tell the Americans that the defence programme is insupportable unless there is extensive dollar assistance. Unless the Opposition are prepared to say that, they are not prepared to face the major fact about the programme, which is that whatever party may be in power, if we have to carry this programme through without any aid, the standard of living of the people of this country will sink very steeply indeed. It will not be just chiselling off this or that social service; the people will get much poorer under the weight of a £3,600 million defence plan over three years.
I believe—I think that here I get the agreement of the right hon. Gentleman—


that it would be a very grievous thing if we went through the same tragic process that we went through in the winter of 1940 when we were compelled to sell our last foreign investments and to he on the edge of bankruptcy before lend-lease arrived. If I understand Atlantic Union aright, it does not imply that this country should be driven into a state of bankruptcy before American aid comes. I should have hoped that the Opposition could have collaborated with the Government in stating this to the Americans and making them realise what will happen if they are going to say, "While you are doing fairly well you shall not get any aid." What it comes to is that if they take that line there will have to be an economic crisis in this country before we can have the aid. On that line no Atlantic unity is possible. It is important that that should be said in the Debate in this House today.
Having dealt with my first point, the cost of rearmament, I come now to my second point, which is the cost of Germany. I must say that I was somewhat surprised that a major change of Government policy was announced in an odd sentence of the Prime Minister's in reply to a speech by the Leader of the Opposition. After all, it is a major change of policy by the Government to decide now that Germany should provide a contingent to Western defence. I do not know how many hon. Members remember that when on 28th March of this year the right hon. Gentleman introduced the subject of rearming Germany, the Foreign Secretary replied in not unemphatic terms. I have looked up the terms. The Foreign Secretary is a very direct man, and he said:
This"—
that is, the right hon. Gentleman's speech—
raises the question of the arming of Germany.
Looking round, he then said:
All of us are against it. I repeat, all of us are against it. It is a frightful decision to take."—[OFFICIAL REPORT, 28th March, 1950; Vol. 473, c. 324.]
It will be interesting to know why this tremendous change has taken place. The Opposition will believe that it was because of the arguments of the Leader of the Opposition. I do not believe it for one moment. The Foreign Secretary is a

very obstinate man. Nor do I believe that it is because of the events in Korea. I think I know why this change has taken place. It has taken place under very powerful American pressure. I do not blame Mr. Acheson when he says to our Foreign Secretary, "Look here, I shall not get anything through Congress for assistance to Europe unless you sign on the dotted line on Germany." This is an old argument. We have often heard it.
I often wonder why it is that Congress is so excellent an excuse for the American politicians while the House of Commons is a very much less active excuse for our own politicians. I have no doubt that this is why the Foreign Secretary's mind has altered. He has felt that for the sake of Atlantic unity a principle must be sacrificed and that, if possible, the practical realisation of the principle must be postponed for as long as possible. I cannot think of anything worse than the announcing of the principle of re-arming Germany to please someone in Congress and then not doing it. In that way we get the worst of both worlds.
I do not want to argue the long-term issues. I want to discuss whether it is really wise in these months to have raised this issue at all or to continue discussing it. The right hon. Member for Woodford is very proud of his contribution to European unity through his speech at Strasbourg. He patted himself on the back for having converted the Prime Minister. Does he really think that by introducing the issue of the German Army last April and repeating it in September he has advanced Franco-German understanding? Do we find that today the French and the Germans are nearer to getting on with each other than they were before the right hon. Gentleman began to talk about a German Army? The right hon. Gentleman has finally dished the Schuman Plan by the talk of a German Army. That plan was possible as long as the Germans were down below and had to agree to it to get something but now they can get anything they like, they are contemptuous of the Schuman Plan because they know they are "going places."
We have unleashed some pretty stormy spirits in Germany and made Franco-German reconciliation far more difficult. I say that of the right hon. Gentleman and of Mr. Acheson as well. And what about


the defence problem? Have we really accelerated Atlantic defence? What is going on at Washington? Is the talk of a German Army hastening defence or is there not now a dangerous deadlock created by the discussion of an issue which is wholly academic, as nobody can rearm the Germans for the next 12 months because the others in the queue have to have armaments first.
I begged this House weeks ago to consider whether it would not have been wiser to give the Western Germans an armed police force, something which the French could swallow and something for which we could supply sufficient equipment, rather than to raise this tremendous issue on which there is complete incompatibility between the French and the German claims in the present phase—though there maybe not two years later. Why are they incompatible? Because Frenchmen cannot grant equality of rights to Germans in a European army. Frenchmen could not accept the return of Manstein and, as was suggested by the hon. and learned Gentleman the Member for Northampton (Mr. Paget), forget everything. They cannot see that there should be no difference between the men murdered in Dachau and the murderers. They do not believe that the Germans are all Christian brothers together with us.
We sometimes forget that the right hon. Gentleman and Mr. Roosevelt signed the Morganthau Plan only six years ago. That was a plan to extirpate the Germans. We were to pastoralise them and in addition nine million of them were actually expelled from their homes in Poland. The French feel that this hysterical change from hysterical anti-Germanism to hysterical pro-Germanism is a sign of mental instability in the U.S.A. and Britain. Their minds are not as volatile as those of the right hon. Member for Woodford and his colleagues, who, after having been the chief anti-Germanists throughout, now tell us, "Let us forget all about it. What was then said was all just war propaganda. The Germans are our natural allies. We cannot trust the French; let us have the Germans."

Mr. Boothby: Who said so? What nonsense!

Mr. Crossman: I shall be very glad to have it denied louder and louder.

Mr. Godfrey Nicholson: I really think that the hon. Gentleman is making a very helpful speech, though heaven knows who he is trying to help. He should not make these statements without saying who uttered them originally. Where were they said? Who said them?

Mr. Crossman: Perhaps the hon. Gentleman was not at Strasbourg. Anyone who went to Strasbourg, even for only a few days, heard this as the continual justification for a German Army, that, after all, in the last resort we could not defend Europe without the Germans, that we would not have our boys there if the Germans were not there, and that the Germans would fight better than the French. The French are aware of these whispers and it does not exactly help the French to recover their morale if that sort of thing is used as the justification for German rearmament.
That is all I want to say about this, except to urge, even at this late hour, that the right hon. Member for Woodford should cease talking about a European army and rearming the Germans, and instead talk about Atlantic defence, which is the only reality. There is no defence through a European army. There is no defence if the Americans and the Canadians are not as deeply in Europe as we are, and there is no way at present of giving the Germans a part of that defence compatible with French interests except by giving them an armed police force. This plan has this further advantage that it leaves room for negotiations with the Russians. It means that we have only done in our zone what they have done in theirs. The Russians are just as afraid and reluctant to rearm the Germans as any sensible Englishman or Frenchman or American.
Now I want to turn to the home front. I listened with the gravest attention to the speeches we heard on the Tory policy for meeting inflation and the cost of living. I think the hon. Member for Chippenham (Mr. Eccles) made an interesting suggestion when he spoke of the importance of good management. It depends what is meant by good management. Let me give an illustration. Under the Tories the Ministry of Pensions was excellently


managed. That meant that the Ministry gave as little as it possibly could, and refused to give anything to a doubtful claim. Now the Ministry are instructed to give all that a man is entitled to and, if possible, to give him a benefit of the doubt.
I should like to know from the hon. Gentleman whether good management in his sense of the word would not mean reverting to the pre-war practice in deciding the amount of the pension. If that is what good management means, let the hon. Gentleman get up and say that his duty to the taxpayer comes first and that the poor old pensioner comes second. I can see that large sums of money could be saved by reverting to the pre-war administration of the Ministry of Pensions and of many of our other social services of which the principle was, spare every farthing, whatever happens to these poor devils. If that is good management there is not going to be any as long as the Labour Government are in power. And I suspect that is all it means.
Then we come to the great argument that we shall all be better off if we learn the one great lesson which is to cut Government expenditure. As the Chancellor of the Exchequer said, it is perfectly simple to work out whom it pays to have Government expenditure cut and whom it does not. If you send your children to private schools, of course it lowers your cost of living to have to pay less for state education. If the old age pension is a quite negligible part of what you have when you are over 65, it pays you to have pensions cut. If food subsidies are a negligible part of your weekly food budget, then it pays you to have food prices up and your taxes lower. It is true that the rich do better when the cost of living is brought down by cutting Government expenditure.
All of us who were young in the 1931 crisis can remember the cut. I was on a fixed salary of £350 a year, and married. I was a wealthy man because there was a crisis and prices had fallen right down. I admit that for people on fixed incomes or in sheltered industries a slump is far more prosperous than a boom. The only thing is that there happen to be more people in Britain who are better off in a boom than in a slump. Therefore this simple Tory solution—cut Government expenditure and give people more in their

pockets—should appeal only to a minority and only to the wealthier part of the country. I agree with one comment made by the hon. Member for Chippenham: the Chancellor's analysis of the danger was admirable but his remedies were a bit pale. I thought they would hardly satisfy our side of the House or, indeed, irritate the other side of the House enough to be effective.
I want to suggest to the Chancellor a four-point programme by which we could deal with the cost of living as Socialists. Number one would be to accept the wage round we now have, and hurry it up. One of the problems is the slowness with which wage negotiations go on. Wage increases have been earned by the workers of this country because their productivity and the wealth of the country has gone up. But we should realise that the wage freeze for two years has operated unfairly in favour of the worker on production and against the worker on a salary, on maintenance, on a public utility.
I believe it is absolutely vital in this new wage round that the production worker on the belt—who has not had a wage freeze at all because his earnings have been going up all the time—should recognise that the public utility worker, the maintenance engineer, the civil servant on a fixed salary and the old age pensioner come first. The production workers are the people who have been given incentive bonuses under the old wage-freeze policy. That is unjust, because a maintenance worker cannot increase productivity and yet he is helping the country as much as anybody else. I hope, therefore, that in any future wages policy of the Government that point will be dealt with. So the first way to keep our standard of living up is by letting wages rise by the necessary amount, but not by too much. We have enough self-discipline in the trade union movement to know that the unions will organise the wage round so that it does not get out of hand.
Then we come to the old age pensioner. If wages go up 7 or 8 or 9 per cent., in a sense it means that his income is 7 or 8 or 9 per cent. down. As a Socialist, I do not see any other solution here than the extension of consumer subsidies. I believe we ought to look at all the subsidies given, not as so many separate sums but as a global sum


we use, now here, now there, to help people keep the cost of living down where it hurts most.
As an instance, I believe that domestic fuel is one of the things which bulks very large for the old age pensioner. Why do we not reduce the price of domestic fuel by 40 per cent. and give him for once a nationalised product which has a consumer subsidy on it instead of reserving such subsidies for private enterprise? Why cannot we keep rail fares down by a consumer subsidy and so enable the railways to make some profits for a change and compete with the roads? It seems to me vital that we should also reintroduce a consumer subsidy on children's clothes, at least to prevent their price rising above the pre-devaluation figure. I believe that with a subsidy on children's clothes and a subsidy on domestic fuel we could really go to people and say, "We are helping you with the cost of living." I know it will cost money. We will come to how it is to be paid for in the fourth point of a programme which will not be popular on the other side of the House.
I agree with the hon. Member for Chippenham on another point. We have this tremendous burden of rearmament. We ought to concentrate on reducing the distribution of unessentials in the home market for the sake of essentials. We have done it for years with motor cars. Twenty per cent. of motor cars go to the home market and 80 per cent. go abroad. IL is a sacrifice well worth making for our dollar exports. In a period of rearmament, when we are in danger of reducing the real standard of living, are we entitled to go on spending millions on television sets? If workers are to go to armament works, let them go from unessentials, from the factories which make washing machines and television sets—

Mr. Boothby: And take my job away!

Mr. Crossman: The hon. Member says, take the job away——

Mr. Boothby: It was only a personal reference. I only asked the hon. Member not to take my job away.

Mr. Crossman: I know the hon. Gentleman always puts his country before himself, but no doubt in this case he is

prepared to move to sound broadcasting at the earliest opportunity. I think the Chancellor should consider rationing these types of goods to the home market and be far more drastic in the rationing of heavy vehicles.
Lastly, if we are to increase Government expenditure in this way, where is the money to come from? I have looked at this fairly objectively and I have noticed that when we get into a war we begin to get equalitarian. When the workers are really needed then we get equality, fair shares, rationing, controls. The right hon. Member for Woodford tolerated a positive abundance of controls when he was Defence Minister after 1940 because there was a war on. In an actual war, the Tory admits that everyone must have fair shares, but he adds that of course we must not do that when we are merely preventing war; then, there are to be no fair shares. Just think of that! I wonder whether this time we could not create a precedent. Instead of waiting until we get into a war before we have fair shares under atom bombardment, could we not have the fair shares in this tremendous effort to prevent war? And if we are to have fair shares—well, Income Tax is still below the level it was during the war—not very much, but it is in fact below. It could go up again. Preparation for previous wars have been paid for by borrowing—that is, by inflation, i.e., by the working class.
Why should we not pay for this war preparation out of the genuine real wealth of the country? Why not this time pay for the rearmament as we go along? Instead of resorting to loan or inflation, why not take the genuine wealth of the country? I am told that that is difficult to do, but it is not. The last Chancellor of the Exchequer showed that it could be done. There was a thing called a Special Contribution, the "once for all." One could no doubt find another name for it. I should hope that the other side would welcome a National Defence Contribution, steeply graduated, starting at £2,000 of capital and working upwards, it should last for the duration of rearmament. Might it reduce the enthusiasm for rearmament of hon. Members opposite? I should not be surprised. At least it might make them really feel what it means, because in previous periods of rearmament millions have been made by that side.
I suggest that there is nothing unfair in such a tax. The working class will have to pay for rearmament anyway, since the cast of living will not be kept down wholly, whatever we do. The main cost is always borne by the working class. I suggest, therefore, to the Chancellor that when he comes to his Budget in a few months' time he will find, as usual, that national interests demand going forward on Socialist principles. We cannot control or finance rearmament in peace-time with anything approaching fair shares without a full-blooded Socialist policy. That is why I sincerely hope that when the Chancellor introduces his Budget next April, it will be as controversial and as fiercely opposed as was Lloyd George's Budget in 1909.

5.53 p.m.

Mr. Cuthbert: I am always very interested in the speeches of the hon. Member for Coventry, East (Mr. Crossman) and also in his articles in the newspapers. I was particularly interested in what he has been saying tonight on two points, the last being his reference to the defence loan to be obtained from people with incomes over £2,000——

Mr. Crossman: A defence contribution, not a loan.

Mr. Cuthbert: In that case, I am quite certain that just as many people on his side of the House as on this side would be affected.
I was also very interested in the reference by the hon. Member to a subsidy for fuel. Perhaps he will remember that when I spoke on this subject some three year's ago, I suggested that in order to keep down the cost of living some of the subsidy money should be spent on subsidising coal, in order to allow of cheaper electricity, railways, power in our factories, and so on. I was glad, therefore, to hear the hon. Member's remarks in this connection today.
I pass for a moment from the cost of living to another subject about which I feel deeply. The House will realise that we have spent a great deal of money on the Services in the past five years. I believe the figure is something like £700 or £800 million. I am very interested to know where that money has gone. It will be remembered that at the beginning of the Korean affair we sent a force of

two battalions to Korea. My interest is strengthened because I happen to be one of the many anxious parents who have a son in the Middlesex Regiment. He is an officer of staff rank, so that his information is good. He told me that on landing, these two battalions were ill-equipped and had not proper armament, and that if the turn of the war at that time in North Korea had swung the other way and the North Koreans had pushed us to the coast, it would have been sheer murder for those troops to have been put into batttle. As a parent, I felt that very much indeed. How thankful I am that the Americains came to our aid, equipped those Forces properly and gave them the armaments, mortars and so on, to enable them to do the excellent job which they have done since.
In what direction has this huge sum of money on our Services been spent if, the first time we are asked to do so, we could not send two battalions to go into active service properly equipped? I should like an answer to this tonight from whichever Minister may be answering the Debate. This matter bears very much on the cost of living, because it shows, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has said, that the administration costs of the Government are certainly not being spent in the right way.
In returning to the question of the cost of living, I shall briefly refer to a matter on which I have touched before. We are, perhaps, on the wrong track in always talking about rises in price. Most people would agree with me that it is not so much a rise in prices, as the depreciation of the purchasing value of their pound, which is affecting everything. I have not heard so far from either side of any real ways of tackling this depreciation of purchasing power. The first step, of course, is to control Government expenditure as much as possible; a great field exists in that direction. I speak with some knowledge as a member of the Public Accounts Committee, which, as hon. Members know, is not a political body. If hon. Members would read more of the various reports which we have issued, they would see that there are great opportunities of saving money in administration.
The second remedy is to stop bulk purchasing. The Public Accounts Committee


have pointed out time and time again the wastage which is taking place. I asked a Question in the House about this, because we hope that next year we shall get from the Government proper accounts on bulk buying, and that the figures will not be mixed up with the subsidies. In answer to my Question, the Minister said that that was what they were endeavouring to do. I have expressed the view, both in the House and in the Public Accounts Committee, that we do not know where we are and that losses are being made in trading accounts because bulk buying is included with the subsidy figures instead of being shown separately.
In addition to the two points which I have mentioned, not only tonight but on many occasions, there is one which I consider to be of even greater importance. I am glad to see that our gold reserves are increasing, but we must not forget the reason for this. Something like 60 or 70 per cent. of our dollar earnings comes from Malaya and oil sources; and as the prices of these commodities have risen in the last year, so have our gold reserves increased. This improvement has not been due to anything in this country.
A more important point than that, about which all hon. Members must know, is that we owe an enormous debt to India, Egypt and other countries because of war expenditure during the last war. I do not think it is going on on such a large scale at the moment, but over the last three or four years we have been paying for these loans by unrequited exports. I believe that the first thing to do to get the currency right is to fund those loans straight away by reducing them to some reasonable figure. As my right hon. Friend the Member for Woodford (Mr. Churchill) has said many times, that ought to have been done a long time ago. We ought to point out to those countries that while it is true they helped us during the war, it is also true that they were helping themselves and it is known how generous we have been in cancelling debts of other countries to us.
The next point was referred to by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) and is that our gold position is getting into such a state that the pound might be convertible in the future. In my view we shall never get anywhere unless the pound is made convertible, and to make it convertible we want sufficient

gold reserves. If we have not sufficient at the moment we should borrow the gold from America instead of in goods, as in the past five years. We must put our reserves right and make the pound convertible and, I am quite certain, we shall then find that the foreign exchange rate will appreciate as far as the pound is concerned.
I was talking to some exchange brokers last week and one said that if the pound were made convertible, we should find that the dollar exchange would jump to something like 3.10 on convertibility alone. I am quite sure the pound would appreciate, and hon. Members must realise that if the pound appreciates, we can buy more raw materials to help industry at home. Even today we have heard from the Chancellor that the cost of our imports is to be a very serious thing. That is true if we are to carry on in this way, but, if we got the pound right and if it appreciated, we should be able to buy those very commodities which we need so badly if we are to increase our productivity. But how can we speak of increases in production in this country if the Chancellor licenses imports to such an extent and only allows imports of raw materials to a lesser degree than before?

Mr. Mulley: On a point of fact, my hon. Friend the Member for Devonport (Mr. Foot) yesterday quoted the E.C.A. Mission's Report which showed that since 1946 we have made an increase in productivity of 20 per cent. per man in manufacturing.

Mr. Cuthbert: I am not disputing what that Report said. I am talking of the future. We shall have to produce more and more in the future and we cannot do that if we cut our imports of raw materials.
I have tried to make a contribution to the Chancellor and I hope he will think of this method very seriously because it is quite obvious to us all that what has been happening in the last five years has been leading nowhere. We have had the spiral, which has been mentioned on many occasions. As soon as prices go up, wages go up and then prices go up again and that leads nowhere at all. I am of the conviction that until we can put the pound on a proper basis and make its purchasing value more, we can never solve our economic problem.

6.5 p.m.

Mr. William Reid: In rising to address this House for the first time, I do so with a considerable amount of trepidation. I represent the Camlachie Division of the City of Glasgow. I may say at the outset that I support wholeheartedly everything that has been said in the Gracious Speech. I should like to take this opportunity of congratulating the mover and the seconder of the Address in reply to the Gracious Speech. Their speeches were dignified, pointed and sincere. My hon. Friend the Member for Rugby (Mr. J. Johnson), in seconding, referred to housing, and said:
Like millions of others … I beg and pray that His Majesty's Government will not give way on this, despite all the demands of the Service chiefs for re-armament."—[OFFICIAL REPORT, 31st October, 1950; Vol. 480, c. 13.]
I feel confident that that prayer is reiterated by the majority of hon. Members in this House.
This brings me to the main point I wish to put before the House. I am seriously perturbed about the absence from the Speech of any reference to the ravages of tuberculosis which are presenting a very serious problem to public authorities all over the country. I have very little Parliamentary experience, but for 30 years I have been a member of the Corporation of the City of Glasgow, which has immense responsibilities for the safeguarding of the health of that great industrial city. For a considerable number of years I was chairman of the public health committee, and I realise that money spent on protecting the lives of the citizens is money well spent and should be viewed as an investment, and certainly not as an extravagance.
In Scotland alone there are 41,000 tuberculosis cases and there are more than 3,500 deaths per annum. Among young women the death rate is double that of England. Dr. Horace Joules, Medical Superintendent of the Central Middlesex Hospital, at a conference in Edinburgh last Saturday, said:
The T.B. rate in Glasgow is as bad as that in notorious Madrid. The whole population of Glasgow should be radiographed within the next month.
I am not going to suggest that that is a practical possibility, but it is the considered opinion of one of the greatest T.B. authorities in this country. He also said:

T.B. should be given the same hospital priority as cancer.
Glasgow today has 12,000 tubercular persons on the registers of the public health department. Glasgow has one of the most efficient health departments in the United Kingdom. Unfortunately, they are fighting with their hands tied. Glasgow is Britain's most overcrowded city. Fifty per cent. of the citizens of Glasgow are living in one- and two-apartment dwellings; 1,400 persons are waiting for bed accommodation. I earnestly appeal to the Secretary of State for Scotland and the Minister of Health to consider a crisis expansion of the tuberculosis services. In Glasgow alone 1,000 additional beds and 300 additional nurses are required.
I make the suggestion for the consideration of the Ministry of Health that the care of the aged, the chronic sick and infirm should be removed altogether from the regional hospital boards, and that some sort of suitable accommodation, less elaborately equipped and expensively staffed than the modern hospital ward, should be provided. If that were done, a considerable number of additional beds would become available.
In the matter of finding sufficient nurses to meet our clamant needs, why not appeal to churches of all denominations and to British Red Cross V.A.D.s to assist in an emergency nursing service? Why not recruit staffs of qualified women to work under the personal supervision of qualified nurses? These women might perform many of the menial functions now being undertaken by qualified nurses. This is not a party question. I want to see it tackled wholeheartedly, with the active support of all parties in this House, in the best interests of the citizens of today and in the best interests of the citizens of tomorrow.
The suggestions which I now put before the Government are, first, more priority houses for tubercular patients; second, absolute priority for housing generally in Glasgow on account of 50 per cent. of all houses being of one or two appartments; third, some form of intermediate accommodation between expensive hospital beds and old persons' homes is urgently required; fourth, appeals to churches of all denominations and British Red Cross V.A.D.s to assist in an emergency nursing service. I have presented these facts and brought


forward these suggestions as an inexperienced Member of this House. These are my sincere and honest convictions. If the Government do me the honour of at least considering these suggestions, my maiden speech will not have been made in vain.

6.15 p.m.

Miss Irene Ward: It falls to my pleasant lot to congratulate the hon. Member for Camlachie (Mr. W. Reid) on his admirable maiden speech. We know that he brings to the House a wealth of experience and knowledge, and accordingly we shall always look forward to the contributions he can make and the valuable facts which he can bring to the notice of whatever Government may be in power. After quite a long Parliamentary life, this is the first occasion on which I have had the opportunity of congratulating an hon. Member on a maiden speech, and I wish to pay the greatest possible tribute I can. Being a Northumbrian, I have always believed that I lived on the right side of the Border, but today I wish to congratulate the hon. Gentleman on living on the proper right side of the Border, and I should like to attempt in my bad Scots to pronounce the name of his constituency and to offer our heartiest congratulations to the hon. Member for Camlachie.
There are many problems and issues on which one would like to speak on an occasion of this kind, when one is privileged to roam over a very wide field. Tonight, however, I intend to raise the question of equal pay for equal work. This is not a controversial party issue, and it has the formidable support of many men and women in the country who are critical of all parties alike for having made many promises, without redeeming their pledges.
Most hon. Members will remember that this is not the first occasion on which those of us who are interested in the rate for the job—and I am tonight confining my remarks to Government service—have raised the subject, and over a long period of years illustrious Members of all parties have made great fighting contributions in the hope that at some time or other their remarks would fall on receptive ears. I remember very well the victory of Miss Ellen Wilkinson on this very issue on a Supply day. I also remember the spec-

tacular and dramatic victory on the question of equal pay in the teaching profession, of Mrs. Cazalet Keir—the only occasion on which the Coalition Government was defeated.
Women are very tired of promises without performance, and, therefore, I make no excuse for raising this important matter tonight. After the defeat of the Coalition Government in the rate for the job we had a Royal Commission, and after that Commission had reported favourably the three major political parties included in their policy programmes during the General Election the implementation of "the rate for the job," some on an extended basis, my own party purely in relation to the question of equal pay in Government service. But time has passed, the pledges have not yet been redeemed, and we are becoming extremely impatient. Women have perhaps a little more belief in political promises than have men. I am inclined to think that on the whole we have been too starry-eyed about the promises of all the parties. As I have said, I make no excuse for raising this issue tonight.
After the Royal Commission a little hope was raised in the breasts of all of us when it was announced that the International Labour Conference at Geneva was proposing to produce a convention relating to equal remuneration for equal work. Naturally, we all watched with great interest the attitude of the United Kingdom delegate, and in regard to the original questionnaire which was sent out to Governments by the International Labour Office, the answer was reasonably satisfactory. I shall not quote it in complete detail, because I do not wish to trespass too long on the time of the House, but this is in fact the United Kingdom answer:
As a broad affirmation of a general principle, the Government in Great Britain have accepted, as regards their own employees"—
and that is the point of my speech tonight—
the justice of the claim that there should be no difference in payment for the same work in respect of sex. They have, however, made it clear that they do not consider that this principle can be applied at the present time in view of the general financial and economic circumstances of the country. In this connection, the Government have felt bound to have regard not only to the heavy


cost which would he involved in the introduction of equal pay in public service, but also to the probable effect of such a measure upon industry and professions generally.
So far, so good. That seemed to be quite a reasonable acceptance of the principle, and I was glad to note it. Then the Conference took place, and the United Kingdom delegate spoke in these terms:
The United Kingdom Government accepted in principle as regards their own employees the justice of the claim that there should be no difference in payment for the same work ill respect of sex. They considered nevertheless that they cannot apply this principle at the present time because they must take account of the financial and economic implications of equal remuneration in the public service and the repercussions of such a measure on the various other branches of employment. The application of the principle has a close bearing on the structure and development of the social services"—
Please note that a different note creeps into the speech—
In considering the obligations which they were to assume under the proposed regulations, the Government could not avoid considering also the proportion of the national income which they were in a position to see devoted to social purposes generally. The conclusion reached by the Committee should indicate clearly that the application of the principle of equal remuneration should take into account the social development and the economic and financial conditions of the countries concerned.
It is of great importance to women that we should have a statement of the position of the Government in the clearest possible terms, because those who believe in the principle of the rate for the job repudiate wholeheartedly the implication that the remuneration of women should bear any relation to the social benefits which they obtain from this country, if that aspect is not also to be regarded in relation to men. That is why I am asking tonight for a very clear statement from the Government so that we shall know exactly where we stand.
I would not be so alarmed were it not for a record of a speech that I understand was made in committee by the United Kingdom delegate. I went to the International Labour Office and I found, to my horror, that no records are kept of minutes in committee, but only of the final statements which are made in the full meeting of the Conference. But I understand that the United Kingdom delegate, in committee, made play with the fact that now we have the Welfare State women benefit so enormously under the

welfare State that in fact they are unwise to press for the acceptance of the principle for which they have fought and stood—I think justly—for so many years. And I say again that the remuneration for women should not be based on or take into account the benefits they may get from our social services, because certainly the trade unions would not accept that aspect for one single moment in relation to wage claims for men. In other words, in respect of remuneration, men and women are entitled to be treated in the same manner.
I was alarmed, and so was everybody else interested in this question, at this statement at Geneva, which I say again is a departure from the previous attitude of any Government. I quite agree that no Government has been particularly forthcoming in relation to the remuneration of women, but this was a complete and new departure; and women will repudiate with all the emphasis they can command any attempt on the part of any Government to relate their remuneration to the social services for which they are paying, or receive, under any social service scheme. In order to try to draw the Minister of Labour, so that we should know exactly where we were, I put down a question on 11th July:
To ask the Minister of Labour whether he will circulate in the OFFICIAL REPORT the full statement of his speech at the recent International Labour Office Conference on the question of equal remuneration of men and women.
This was the reply:
Equal remuneration cannot, in my view, be considered as an abstract conception. It must be viewed first of all against the widest possible background of social policy as well as economic and financial conditions.
Surely the same applies to men.
The real living standards of men and women workers alike depend upon the maintenance of the financial stability of their own and other countries.
We do not disagree with that, but surely the principle applies to men equally with women.
This is a matter of special concern to countries such as my own which have already established and aim to maintain a very high level of social services.
Here again we get creeping in an attempt to relate the new welfare State to the remuneration of women.
I would also remind the Conference that the relationship between the remuneration of


men and women is but one constituent element of the wage and salary structure. Governments cannot, I suggest, be expected to take positive measures to secure the observance of one particular principle of remuneration which they would not be prepared to adopt in regard to remuneration generally.
I want to say about that particular paragraph that I think it is a most devastating statement and full of hypocrisy, and I will tell the House why.
So far as the medical services are concerned, in the Ministry of Health the Government have been obliged to accept the principle of equal remuneration, because the British Medical Association, a very powerful body, would not have it otherwise. The same applies to the dental services, and I am creditably informed that Dame Evelyn Sharp, who is the chief permanent secretary of Town and Country Planning—we all congratulate her on achieving that well-deserved and high appointment—is in receipt of the rate for the job and gets the "men's rate" if we like to call it that, for the appointment. It is a deliberate travesty of the truth to say in that paragraph that no Government can accept that principle because of its relation to remuneration generally.
Finally, I wish to raise the question of equal pay for equal work in the Air Transport Auxiliary. I always like to pay tribute where tribute is due. I have had a lot of quarrels with Sir Stafford Cripps, but he was a supporter of the rate for the job. Before he became Chancellor of the Exchequer—please note the emphasis on the word "before"—he fought a very valiant battle with his predecessor and obtained the rate for the job in the Air Transport Auxiliary, for which those of us who knew what was happening were extremely grateful.
Here is the extraordinary aspect of that transaction. The women pilots in the Air Transport Auxiliary got the same rate of pay as the men pilots. The women mechanics attached to the ground staff also got the rate for the job. The one person who was denied the rate for the job was Miss Pauline Gower, who was the Commandant and really the founder of the Women's Air Transport Auxiliary. The House will remember that she was the first woman to obtain her "B" licence. When she married she became Mrs. Fahie. I always thought that her death at a very early age was a great loss

both to the women of this country and to the country as a whole.
Pauline Gower, as she was known at that time, built up that service. She herself fought and she won the support of Sir Stafford Cripps. She got the rate for the job for her own pilots and for the ground staff, but because of the attitude of the Treasury she herself as leader was denied the rate for the job. I deprecate this sanctimonious attitude of arguing that we cannot proceed with the application of the rate for the job over a relatively narrow field because it is not possible at present to introduce it over the whole area of the services and into industry, and that therefore everybody else, even where the issue is straightforward, should be deprived of the benefit. It has been done in a narrow sphere.
Now I wish to quote the final sentence of the Minister of Labour. He said:
Finally, there is the crucial question of definition. I trust that the Conference will be fully alive to the dangers of any formula which would have the effect of introducing an undue rigidity into national wage and salary structures, and which would unduly limit the flexibility of approach which is essential to the operation of collective bargaining."—[OFFICIAL REPORT, 11th July, 1950; Vol. 477. c. 84–85.]
I have only one observation to make on that, and it is that in the cause which I am putting forward tonight—the application of the rate for the job in Government service—no question of definition arises. There is no complication, and no Minister of any Government need be frightened. If I am lucky enough to sit with my party on the opposite side of the House after the next General Election, I want this remark on the record so that my party leaders will be under no misapprehension as to our pledges in this matter. I am delighted to know that we have in fact committed ourselves during the life of the Parliament, if we are in power, to the introduction of the rate for the job in Government service.
I do not wish to take up any more time, because I know that we shall not be able to continue this Debate on this subject for very long. I conclude by saying that women are not asking for an increase of salary: they are demanding justice. We have waited for a very long time. We think, and I am sure that the House will agree, that during the last war


our women made a very great contribution. Equally, I think it is right to point out that the Government are paying equal remuneration to one of our distinguished women who is also fighting this battle. I refer to Dame Caroline Haslett who is a member of the nationalised Central Electricity Board.
I have listened with great interest to arguments on this question of equality and fair shares. I am bound to say that when I find that for the higher executive posts, that is to say members of nationalised boards——

Mr. James Hudson: And Members of Parliament.

Miss Ward: —and heads of Government Departments, women are able to get the rate for the job, then I cannot understand why equal pay in Government service is withheld by the Government.
In the councils of Europe to which we send some of our best people to discuss education and the rebirth of democracy in Germany, it is thought extremely odd that this country which is outstanding in the service it has received from women, in the support it has given to women and in the use it has made of their efforts, should adopt this attitude. The world finds it very strange indeed that the one gesture which would be an outward and visible sign of the high status of women and the part we believe, and hope, that they can play in bettering this country and the world as a whole, should be denied them. The world finds it very strange that they should be denied the equality which we regard as an act of justice and which we hope this Government will see its way to effect.

6.38 p.m.

Miss Burton: It is with great regret that I say how sorry I am that there was no mention in the Gracious Speech of this question of equal pay. I say that there was no mention of it, because tonight I do not propose to ask the Government for the implementation of the rate for the job, but for something which I think they could give, which I think they should give and which I regret very much was not given of their own initiative in the King's Speech.
I should like, first, to build up what seems to me to be a case which is unanswerable factually. In my notes are

what I think I would call five basic points, and I have put them as "five basic points for loose thinkers," I do not wish to say that I would call the Government Front Bench loose thinkers; but I think there is a good deal of loose thinking on this subject in the country. This is a subject, rather like politics and religion, on which everybody has got an opinion—usually a very strong opinion.
It would perhaps be useful if I were to follow the hon. Member for Tynemouth (Miss Irene Ward) and try to keep the discussion as factual as possible. I would like to suggest that these five points which I am going to make are background points, and the first one is this. If we are seriously to consider the rate for the job, the question of that rate and that of the size of the worker's family are two entirely separate matters and cannot be considered together. Regarding the second point, we women are going to lose nothing by admitting the truth. If we do not admit the truth ourselves, somebody will point it out to us. I propose to proceed from strength to strength by admitting the truth. It is that the "representative"—and I put the word "representative" in quotes—employed man is a married man with some financial responsibilities of parenthood, and that the "representative" employed woman is a spinster. Those are two facts which we have to remember.
Going back to my first point, there is a question of dependency which is very difficult to decide. There is no doubt whatever that the shifting of the age composition of our population, with the resultant increase in the number of old people, is greatly increasing the dependency upon women. My figures are for 1947, and they show that the proportion of men and women over 65 years of age had increased in the last 15 years by 49 per cent. Arising out of that point comes my fourth point, that there is a great deal of difference between a married man in retirement, who is no longer financially responsible for his children, because they, in fact, would probably be able to help him if necessary, and the spinster in retirement, who still has people dependent upon her.
My last point is that, if, as I believe should not be done, we consider the size of a worker's family and the rate for the


job, some distinction must be made between the childless man and the man with a family. Lord Beveridge did make that distinction in the Beveridge Report. Having stated those five points, I now want to give briefly the Parliamentary background on this question.
We go back 30 years to May, 1920, when this House passed the following Resolution without a Division:
That it is expedient that women should have equal opportunity of employment with men in all branches of the Civil Service within the United Kingdom and in all local authorities, and should also receive equal pay."—[OFFICIAL REPORT, 19th May, 1920; Vol. 129, c. 1539.]
We now pass over 16 years of the Mother of Parliaments and come to 1936, when this House accepted a Motion of the late Miss Ellen Wilkinson which was as follows:
That, in the opinion of this House, the time has come when the Government should give effect to the Resolution adopted by the House of Commons on 19th May. 1920, and forthwith place women employed in the common classes of the Civil Service on the same scales of pay as apply to men in those classes.—[OFFICIAL REPORT, 1st April. 1936; Vol. 310, c. 2017.]
The action of the Government in 1936 was to compel the House to reverse its decision.
Now we go forward to 1944, and we come to 28th March, when the Government—this time a Coalition Government—was defeated on an Amendment to the Education Bill proposed by Mrs. Thelma Cazalet-Keir demanding equal pay for men and women, or, if we are to be exact—and I would rather be exact—in the actual words used—
not differentiate between men and women solely on the grounds of sex."—[OFFICIAL REPORT, 28th March, 1944; Vol. 398, c. 1356.]
I should have thought that that could have been accepted by fair-minded men and women of any party anywhere. What was the result? The then Prime Minister, the right hon. Gentleman the Leader of the Opposition, came down to the House on the following day and compelled the House to delete the offending Clause, and I remember thinking at the time that it was a strange example of democracy. Anyway, this is the Parliamentary background and shows the record of Conservative and Coalition Governments.
I should like to move to the middle section of what I want to say and I come to the Lord President of the Council, when he was Home Secretary in 1942. On 30th July, 1942, he said:
… it is the general policy of the State and industry that there are certain broad levels of wages for men and women. I am not saying whether it is right or wrong … The principle adopted by the Government at the beginning of the war was that the rate of pay for women should be approximately two-thirds of the rate of pay for Ellen."—[OFFICIAL REPORT, 30th July, 1942; Vol. 382, c. 776.]
I should now like briefly to deal with the viewpoint of the trade unions on this matter. I think I am being fair when I say that, in the evidence given before the Royal Commission, the viewpoint of the trade unions was that, where women are given the same opportunities and the same facilities as men, they can turn out work as well as men. The employers, in the evidence they gave before the Royal Commission, took the opposing view. I would like to say in passing, and apart from any ethical considerations, that the trade union movement for many years has believed in the principle of the rate for the job, because we understand the danger of cheap labour and putting people out of employment, as we found in South Wales.
On this question of industry, we all know that in this country the matter is not so easy to define. There are certain industries which are quite rightly labelled men's or women's industries. I have taken as men's industries heavy industries like shipbuilding, mining and transport, in which in 1947 there were approximately 3.9 million insured workers, of whom women accounted for only 2 per cent. This was a man's industry. We then get the position completely reversed if we look at hosiery and laundry work, where the proportion of women is about 75 per cent., or in dressmaking, where it is 90 per cent. It is typical of this country that things are seldom well-defined, and, apart from these two extremes, we get a middle, intermediate group, into which I put engineering and electrical engineering, and in which there are about four million insured workers, of whom 20 per cent. are women.
It is a most difficult business because of the overlap groups, such as pottery, hosiery, textiles, particularly cotton, woollen weaving and warping It is my


opinion, and I believe it is the opinion of most fair-minded people who believe in this principle of the rate for the job, that whatever reasons may be given for the fixing of women's wages in industry or outside, the impression remains that convention and prejudice play a very striking part in fixing the differentials between men and women. I suggest that, while everybody is entitled to his or her own opinion, differences of opinion based on prejudice are impossible to remove.
If we look at the position in other countries—and the hon. Lady opposite has referred to the International Labour Office—in 1939 the I.L.O. published a book called "The Law and Women's Work," in which were cited some 24 countries in which the rate for the job was given in the Civil Service. In America, where I spent three months in 1948, I found that the question of equal pay in the education service varied from State to State. There was no Federal overall law. What I found out—and I was particularly interested because the point was referred to in correspondence in "The Times" when the Report of the Royal Commission was published in 1946—was the fact that, in those States where equal pay was in force in the teaching profession, as compared with those where it was not, the proportion of men teachers to the total number of teachers had wide variation. In other words, men were not kept out of the teaching profession in America because equal pay had been granted. That is not my opinion; that is a matter of fact.
In France we find that throughout the teaching profession salaries are the same for teachers of either sex where seniority and duties are equal. In so far as industry is concerned, there is a point which I think we might well ponder, a point concerning the Fascist attitude to women. During the German occupation of France, any progress which had previously been made in the application of the principle of equal pay was nullified to a great extent. In those factories which were controlled by the Germans, women's wages were fixed in theory at 75 per cent. of the men's wages. I am glad to say that in April, 1945, when the Germans had been removed, the French Minister of Labour declared that the policy of his Government was to observe as far as possible

the principle of the rate for the job in order to eliminate unfair inequalities between the wages of men and women.
The U.S.S.R. is completely on a plane of its own regarding equality of the sexes; there is full opportunity for women in Soviet Russia today.
We have seen the record of Conservative and Coalition Governments in this country, and we have looked at the Parliamentary background and at other countries. But what is going to be the record of this Labour Government over this particular matter? On 11th June, 1947, the then Chancellor of the Exchequer, the present Minister of Town and Country Planning, said:
As a broad affirmation of a general principle, the Government accept, as regards their own employees, the justice of the claim that there should be no difference in payment for the same work in respect of sex."—[OFFICIAL REPORT, 11th June, 1947; Vol. 438, c. 1069.]
I would like us to remember it. That, presumably, is Government policy, but before I come back to it I wish to return to what I called "loose thinking."
I have three examples here which I think we might all ponder regarding this matter. The first is this. I said there were certain industries defined as men's industries and women's industries. That is quite all right so long as neither—and I do not care which—carries the implication that it should receive more or less money because it is a men's industry or a women's industry. After the 1914–1918 war, we saw in this country certain work classified as women's work, and I would cite, in particular, domestic work and nursing, in which there were low wages, long hours and bad conditions. We all know that when the war broke out we could not get domestic workers because no one thought it worth while doing the job, and we could not get nurses.
The second point is—and I have no desire to be abusive to the opposite sex—that during the war the greatest compliment that could be paid to a woman in a factory was that she had done the job as well as a man. I want to suggest, without any disparagement of the men, that that was never the point at issue. The point is how well is a job done, not whether it is done as well as somebody else would do it. I believe that drove men to one extreme and women to another; it drove the women to say that they were


better than the men and the men to say that they were better than the women. That was a by-product of that attitude.
I am now coming to the Liberals, and I informed them I should be raising this point. I do not want to call the women Liberals loose thinkers, but I want to criticise very much a resolution passed by the Women's Liberal Federation at their last conference. To my mind it was a resolution of loose thinking which did nothing but harm to those who believe in the rate for the job. It was a unanimously-carried resolution that there should be equal pay in the Services. In the first place, if we want to make out a case which the Government cannot answer, it should be foolproof. To take as an example the Women's Services, where the work is not the same as in the men's Services, and to suggest that there should be equal pay is to furnish the people one wants to convert with a complete answer for not accepting the suggestion. Secondly, if the Liberals meant that the work in the Women's Services should be the same as in the men's, then I chink it was bad, for at present women in this country are not eligible for combatant service, and I very much hope they never will be. Therefore, when I am asking for the rate for the job, I am not asking for equal pay where the work is not the same.
Before I tell the Government what I hope they will do, I want to ask them two questions. I want to know whether any Member of the Government Front Bench thinks that his wife or any other woman in this country goes into a shop and gets something more cheaply because she is a woman. We have to pay the same train fares and the same for everything else. I raise that point because I was in a train quite recently and overheard a conversation between two men. They were discussing some hostels connected with large works. I gathered they had separate hostels for men and women. One man said, "In your factory, do women get the same pay as men?" "Oh, no, they get less," said the other man. "What about payment in the hostels," asked the first man, "Do the women pay less than the men?" "No," replied the second man, "it would not be fair to ask the men to pay more." I think that if the women are earning less, they should pay less. That is a logical deduction.
The other point I wish to put to the Government is this. I want to know if any senior women civil servants are getting the rate for the job at present, and, if so, I want to know how many and why. We were told in HANSARD of 26th May, 1949, column 103, that the cost of equal pay in the public services would amount to about £35 million. We in this House of Commons know that we have to decide the order of priorities. We are not in this House to represent one section of our constituents, and it would be disastrous for democracy if the women came here to speak for the women and the men to speak for the men. We can only take the priorities together, and it is the Government's job to sort them out in some order.
I am not prepared to stand here today and say I believe that equal pay to the extent of £35 million is a priority which should be put into operation at the present moment. It may be, but I am not prepared to say so. I believe in this Government; I think they are a grand Government and something far superior to what could be produced from the other side. Because I think they are a grand Government, I very much hope that they are going to give some token of reality to their promise. I accept their promise. The Government have said that they believe in this principle, but I am tired of this priority being at the back of other priorities and never moving up at all.
Even though we could not find the £35 million, I want to ask the Government to give equal increments to people in the public services where the work is the same. We are told that equal increments in the Civil Service would cost £1,750,000. That information was given in this House on Thursday, 24th February, 1949. Because this is such a grand Government, and because we are talking about an injustice to more than half the population, I want this Government to go down on record as saying, "We have accepted the principle, and we are the first Government to do it while in power. We will now do more; we will give a token recognition, because the other is not possible, and we will give equal increments where the work is the same to all engaged in the public service."

7.0 p.m.

Mr. Gerald Williams: It is seldom one can rise from these benches without having to go hammer and tongs


for the hon. Member who has spoken before, but this evening we have heard two most excellent speeches from both sides of the House. I think they commanded the sympathy of every hon. Member. We all want to see equal pay for women come about, but we are just wondering how and when we can bring it in. I notice that both ladies have the force of their own convictions in that they are drawing the same salary as the gentlemen Members of this House, and well they deserve it if they always make speeches such as they have just made. But perhaps we shall have to wait for a lady Chancellor of the Exchequer before everything they want is implemented. Nevertheless, I wish them the best of luck.
The Gracious Speech has given me a great deal of disappointment in that I cannot see that there is anything in it that is going to help us to increase production. I am only going to speak quite shortly on two items which I think would help us to produce more which at present is essential for rearming the country and maintaining our economic position.
The first is housing. I make no apology for speaking about it again, because hon. Members know how important it is. The second is restrictive practices, about which very little has been said. I hope that when I mention restrictive practices my words will be considered not in any bitter way but in a constructive and helpful way. On many occasions I have expressed the view that housing should be absolutely priority number one. Now I am gratified to think it is agreed by all it should be. When at Blackpool it was decided to talk of a real figure of 300,000 houses a year it caught on spontaneously all over the country.

Mr. Shurmer: Of course it did. It is cruelty to the people.

Mr. Williams: I believe that if we go to the country on that programme we can get the houses. I do not want to dwell on harrowing details, because I know every hon. Member has a sad story about housing. It is common for hon. Members to hear in their constituencies, or to learn from their letters, of husbands and wives living in one room with two children and another child expected at any time. This is in spite of the promise of the Minister of Health, who said we should have

a home for every separate family in the country by the 1950 Election.

Mr. Shurmer: No. When is he supposed to have said it?

Mr. Williams: That is what he said. He said, during the 1945 Election, "I promise you that by the time the next election is here, every family will have a home of their own."

Mr. Mulley: The Conservative programme in 1945 was to provide 750,000 houses. We, in less than five years, provided over one million.

Mr. Williams: In 1940 we promised 220,000 houses per annum and it was described by the Party opposite as "chicken-feed." If we do not produce the houses we will get bad work. I want houses in order to increase productivity. If a man is spending the whole week with "in-laws," or his wife is sharing the cooker with one or two other families, how can they go to work with a high morale, how are they going to increase production? Then there is their health. Lack of houses causing insanitary conditions is not only going to add another bill which the Minister of Health has to pay out in additional health services, but it is continually causing loss of time in the factories.
We must have these houses, yet in the speech from the Throne early this year there was not a single mention of houses. In the Gracious Speech we are now discussing, we ire simply told that the Government are going to continue to give housing a high priority. The position could not have been worse if we had had a fat cow as Minister of Health. Now we are told that the position is to remain the same.

Mr. Shurmer: Tell us about the steel houses.

Mr. Williams: I come now to restrictive practices in relation to productivity. Cannot something be done about them? Originally, restrictive practices were brought in on both sides of industry to obtain security and stability, in order to prevent shortage of work and also empty order books. Surely that is an anachronism. Now that order books are full and there is no unemployment, are not these practices out of date? I know it is difficult to legislate against them, but cannot the Government lead industry to get rid of them all?
I know that in the past employers have maintained prices by various means. They have introduced quota schemes and have allocated markets to particular groups or firms. Surely the Government after recent legislation now have power to break this down. If they have not the power, then for heaven's sake let them obtain that power quickly. We on this side pledged in 1945 to stop all restrictive practices from the employers' point of view, to the best of our ability. In 1948 we supported the Government on the Bill relating to monopolies, and we still give them that support. I believe that a lot of restrictive practice by employers have been cured to a great extent already. If they have not, then let us go on attacking those practices wherever they crop up.
It is quite understandable why employed people want restrictive practices. They want to avoid being unemployed. There is nothing a man dreads more than unemployment. But each party is pledged to a policy of full employment and yet something is wrong. The Girdwood Committee reported that it took 45 per cent. more man-hours to build a house in 1947 than it took in 1939. The printing trade is being held up in the same way. For example, there is a most up-to-date printing machine in America costing £15,000. If one has the dollars and brings it to this country, one finds that, by trade union rules, 13 men are required to run that machine when seven men run it in the United States. The result is that in America they can produce 50,000 copies of an eight-page paper per hour, whereas here we can produce only 27,000 copies.
I know that people do not want unemployment. They are persuaded to eke out the hours so that there will be no unemployment. There is the case of the chap who goes down the river in a tug. He does two or three hours towing and if the tug is not at dockside level when he returns, he has to wait until the tide lifts it to dockside level before he gets out, because he is not allowed to use a ladder. It happens to make the job last longer. Could we not get together to try and persuade the working man that these restrictive practices are not necessary at the present time?
There may be a good reason why an electrician always has to have an assistant. There may also be a good reason, though

I cannot see it, why he is not allowed to bore a hole in a brass plate more than three-eighths of an inch in diameter but has to bring in a carpenter to do it. But I am sure hon. Members opposite can see the foolishness of and the lack of necessity for all these dodges to avoid unemployment. It is vital that we have the armaments to defend the country and that we have the people to build the houses. If the Minister of Labour would tell us whether he has got a committee sitting to inquire into these matters and, if so, how far they have got and when they are going to report, it would be a help. I believe we could solve these problems, which I am more than anxious that we should solve.
The only thing that did please me in the Gracious Speech was that apparently we are not going to be inflicted with much more nationalisation. I know why. It is because the Government are frightened to introduce it. We went around the country at the last election telling the people how much money had been lost by nationalisation. I believe they have taken it in and that they do not want any more nationalisation. The Government seem to like to show losses. I have heard hon. Members opposite jeer at profits as though they were wicked. The Government go on gaily making losses. I notice that the Government claim to have reduced the loss on civil aviation, but when one analyses the results for this year as compared with last year, one finds that the loss was 4s. 8d. a mile as against 4s. 6d. Of course, if one continues to fly less miles, one can cut more and more losses. Perhaps it would be a good thing to stop nationalised flying altogether.
I want finally to refer to the question of security. Security seems very lax on the Government benches. Bearing in mind the recent atom case, surely if a man is paid well he should sign a document to say that he will not leave the country without permission. It may be difficult to stop him, but all the same it would make it more difficult for him to go. If that cannot be done, and if he leaves the country, could he not be searched for papers before he goes?

Mr. Poole: We cannot search his brain.

Mr. Williams: No, but we can search his papers. He cannot carry everything in his brain, even if the hon. Member can.


If he does not return, we should make immediate inquiries. Why have we lost our sense of security? Here in this Gracious Speech we have a typical example. Everything in the speech we read in the papers two or three days beforehand. I know that we had Budget leaks not so long ago. I know that each party has leakages from its deliberations upstairs. But why this leak, evidently direct from the Government? Hon. Members may think it a small point, but one day it may be serious, and it makes the Government look a little slacker and a little worse than we already knew they were.

7.14 p.m.

Mr. Hector Hughes: I wish to touch on a topic which has not yet been mentioned in the course of this Debate. It is, I think, non-party and non-controversial, and I hope that it will have the support of every hon. Member. It relates to an aspect of the food supply of the country which urgently requires statutory attention in order to remove what I submit is a legitimate grievance. It is not specifically mentioned in the Gracious Speech, though it might come under one of four heads: "Powers to reorganise and develop the white fish industry;" "Stability of costs and prices; "Powers to regulate production, distribution and consumption and to control prices," and "other Measures."
I should like to suggest one other Measure—a very small Measure—which would be required to redress this very obvious grievance and which would be a means of realising the first three of the aspirations in the Gracious Speech to which I have just referred. The Bill which I suggest would improve the safety of trawler crews, would encourage them to go to sea and reap a greater harvest from the sea, would develop the fishing industry, would help to stabilise costs and prices in that industry, would regulate production, distribution and consumption in that industry, and, in addition, would save coal, a very valuable commodity.
Those who are conversant with that industry will agree that at present trawler crews and drifter crews are sadly discouraged by unnecessary dangers which are artificially produced, by prosecutions which amount to persecutions and by the crews being mulcted in costs and expenses, all of which amount to victimisation, all

of which grievances could be removed by the very simple Measure to which I am coming in a moment. Last July it was thought that these grievances were removed by Statute. Then a notice was issued by the Ministry of Transport which it was thought would fill the gap which was found to have been left in the Statute.
The Gracious Speech which was delivered on 6th March, 1950, contained a promise in these words:
… a Bill to regulate and improve the living conditions of the crews of fishing trawlers.
That Bill, which was eventually passed and is now the Merchant Shipping Act, 1950, was an admirable little Bill which did certain things but it did not deal with the problem which I am about to put before the House. It improved the law relating to crew accommodation in fishing boats, the engagement and discharge of crews, the review of punishment imposed by naval courts, and other matters, but, excellent as it was, it did not deal with the particular grievances which I wish to discuss.
The grievance I have in mind is very serious. It has caused deaths. It requires urgent attention either by Statute or by regulation having the effect of Statute. I hope I have whetted the curiosity of the House sufficiently to make hon. Members wonder what this grievance is. It is the danger which is caused by the stowage of loose coal on the decks of trawlers and drifters. In March, 1950, I approached the Minister of Transport about it as a result of a letter which I received from the Aberdeen branch of the Transport and General Workers' Union. That letter raised this problem, and pointed out that some trawler fleets consist of old, decrepit vessels—
floating slums, which were built 35 to 50 years ago for nine- or 10-day trips in the North Sea. Now these vessels go to Faroe, Iceland and even as line-fishing boats as far as Greenland. It is, therefore, necessary that the main bunkers be supplemented. This is done by stowing coal in the fish room, and on deck both fore and aft. We admit that force of economic facts makes it necessary that this be so, but we demand that the method of stowage be subject to strict control.
When I brought the matter before the Minister of Transport, to his credit be it said that he realised the seriousness of the grievance, he admitted that deaths had been caused by this practice and he at once promulgated a notice called Notice


M.343 to owners and skippers of fishing vessels laying down certain precautions as to how this problem should be overcome. I do not propose to quote the whole of this short notice, but I feel I should read part of what it says:
Over the last two years at least four lives have been lost through improper stowage of loose coal on the decks of drifters and trawlers and failure to take proper safety precautions. It is therefore opportune to list the precautions which should he taken in connection with such stowage. The carriage of bunker coal on deck is undesirable and dangerous and should only be done when circumstances (e.g. length of a particular voyage) make it unavoidable. Should it be necessary to carry coal additional to what is stored in the bunkers, it should be stowed in a portion of the fish hold temporarily adapted for this purpose. This coal should either be used first or transferred to the bunkers as soon as possible and as weather permits.
The notice then set out four simple precautions which could and should be taken in order to prevent any more deaths from that cause.
Some owners wisely adopted the rules laid down in the notice and, as a result, their crews work happily, safely and well. There are good owners and bad owners, however, and some of the bad owners did not adopt these precautions, with the result that their crews refused to sail. Who would blame them? They would have been incurring unnecessary and artificially created risks. Those refusals gave rise to prosecutions, but who was prosecuted? Was it the owners who had not obeyed the fair and reasonable suggestions of the Ministry of Transport? No; it was the men who had refused to sail. When the matter came before the police court, the men relied on this notice by way of defence, and their defence was upheld. The charge was dismissed, as it should be.
That was not the end of it, however. There were other serious aspects. Because the court was doubtful about the effect of the notice, because the owners pleaded that the notice had no statutory effect, the court refused to allow the men costs, although they had incurred costs in appearing before the court, or compensation for the loss of the day's work. The position is, therefore, that the court is doubtful whether this notice has any statutory effect.
I submit to you, Mr. Speaker—I was about to say "My Lord"—that this doubt shows that here is a grievance

which should be redressed, and which should be redressed either by a Statute in this Session of Parliament or by way of a regulation having the force of a Statute. I am sure the House will agree that it is disgraceful that any owner should seek by economic duress to force crews to sea in dangerous ships, especially in contravention of the Ministry of Transport's notice. It is reminiscent of the bad old days of the coffin ships and, in effect, it is a form of sordid murder for profit which should lie heavily upon the conscience of the bad owner taking this course. For the crews it is victimisation that they should have to suffer unjustifiable prosecution—for, after all, the court has held that the prosecution was unjustifiable—and it is victimisation that they should have to defend themselves in such circumstances and not be allowed the costs and expenses of doing so or compensation for the time they have lost in doing so.
This is not a particular case but a general case. It is to be found not only in the Port of Aberdeen but, I am informed, in other ports as well. If the owners are right in their contention that this notice has not the force of a statute, then I urge the Government to include in the coming Session a Bill which will give it that force and which will redress this grievance.

7.26 p.m.

Mr. Hamilton Kerr: The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) inadvertently referred to you, Mr. Speaker, as "My Lord" and, in listening to him, I could not help recalling the tribulations suffered by a certain noble Lord in making his maiden speech in the 18th Century. He said, "I got out two or three sentences and then a mist rose before my eyes. I then lost my recollection and could see nothing but the Speaker's wig, which swelled and swelled and swelled until it covered the whole House. I then sank back on my seat and I never again made another speech." I trust that the hon. and learned Member for Aberdeen. North, will at least not suffer that tribulation.
The Chancellor of the Exchequer today said that he hoped particular interests in the country would not press their claims to the national disadvantage for, if that happens, as he rightly observed, it is


usually the weakest who suffer, and often the weakest are the old age pensioners. May I say a few words about their present plight and make four practical suggestions concerning how we may possibly be able to help them? As winter approaches and, I believe, the long dark nights, coal becomes very important to old age pensioners In their reduced circumstances they often find it difficult to pay the present price of coal.
I came across a case in Cambridge the other day of a butcher who had noticed that a certain lady had not bought her meat ration. He said to her, "Mrs. X, why have you not bought your meat ration this week?" She replied, "I wanted to save the money for coal." I am glad to say that she received her meat ration after all. I believe that gas and electricity are also large items in the expenditure of old age pensioners, as is clothing. One of the penalties which old age brings is the penalty of loneliness, and I have found very many old men and women who greatly appreciate these new Darby and Joan clubs where they can get out, once a week or once a fortnight, have a chat and a laugh over a cup of tea served at a cheap rate. But I have found that some were rather hesitant to go because they felt they were looking a bit shabby.
May I make four suggestions? I believe the Minister of Fuel and Power is allocating another million tons of coal to the home market this year. Will he assure us that the old age pensioners will at least have a fair share of the extra allocation? Secondly, we are about to begin a big armaments drive and will be needing men and women urgently in additional numbers. I believe there are many men and women, both in Government Departments and in the nationalised industries, who would like to stay on at work after the age of 65. In a time of national emergency could we not allow those people to stay on and work?
Thirdly, could we not possibly ask the Minister of Health to build more small houses for old people. Old people like to be near their friends and relations and very often the chance of living in a small house permits them to do that. Lastly, cannot we urge the local authorities to extend and develop the system of home helps? I believe these home helps are

doing splendid work and that they have saved many a tired and ill person from great hardship. Cannot we attempt these four things, and do them before the winter is here?

7.30 p.m.

Mr. Janner: Let me say at once that I entirely agree with the points that have been made by the hon. Member for Cambridge (Mr. Hamilton Kerr), and that I am glad he has spoken as he has done. I think he will find a considerable amount of sympathy throughout the House with the views he has expressed and the suggestions he has made, and I hope that the lives of those who have passed beyond the age of work will be made more tolerable and happier by the adoption of some of his suggestions.
Of course, there is a difficulty with regard to his proposals becoming effective, because, unfortunately, from his side of the House we have been hearing a considerable amount about economies. I have been waiting to hear exactly what economies it is proposed by them to introduce so that the housing programme of hon. Gentlemen opposite of 300,000 houses, or 400,000 or 500,000 as the case may be, is to be achieved. It is very easy to talk in numbers like that, but very difficult to bring them down to practical realities. The hon. Member for Epping (Mr. Nigel Davies) said that the food subsidies should be cut. I am sure the hon. Gentleman who spoke last will appreciate that if the food subsidies are cut it is not much use to talk about giving the facilities he spoke of, because the old age pensioners will be in exactly the same position of hardship if they are given those facilities but not the benefits of the food subsidies.

Mr. Arthur Lewis: In a much worse position.

Mr. Janner: In a worse position. I did not want to overstate the case. Then, again, the same hon. Gentleman said that the Health Service should be cut. That is not going to help the old age pensioners, nor is it going to help any of the other people of this country. I suggest to the hon. Member for Cambridge that he might have a word with some of his


hon. Friends to see if they would reconsider the position, and state their exact proposals for effecting economies while providing the housing priorities they talk about. Incidentally, I put this same question of economies to the hon. Member for Southend, East (Mr. McAdden), who said he would deal with it later in his speech, but he did not do so.
One of the Members on the Opposition benches said that we could not make homes for the people but only provide houses. That is one of the differences between the party opposite and ourselves. We say we can make homes for the people. We say we have provided homes for the people. We say we have provided houses which are fit for people to live in, and which give the women proper facilities for running their homes in a proper manner. In addition to that, we have supplied the social services which make it possible to have homes—make it possible for the houses to become real homes. Indeed, we say that we are endeavouring to make the whole country a home fit for all the people to live in.
I think it is also important in this regard that we should consider not only the question of building houses but the question of providing well-constructed houses so that we shall not have the state of affairs in housing which prevailed in consequence of the type of building that was so often erected before the Labour Government took office. In my own constituency the following kind of argument has been used among people who are living in condemned houses, houses which have fallen into decay in consequence of the fact that they were not properly built. Those people have been told precisely what we are being told here with regard to the building of 300,000 houses a year. They have been told. "You should have houses built for you to live in before others get houses similar to those which have been built on the New Park Estate"—which happens to have been built in a manner provided by the Labour Government. The people in the deteriorating houses have been told the others should not have houses with those amenities, when there are some people who have no houses at all.
Those are all, of course, false arguments, and I think that when the Con-

servative Party are dealing with these matters they should not come out with just an advertising stunt about additional hundreds of thousands of houses. What they should do is state how they would build them, what kind of houses these would be, where they would economise in other respects to enable such houses to be built, and how we should cope with the situation which would confront us if we were to increase expenditure in that regard and provide the facilities necessary for those who occupy the houses.
It is nonsense for anyone to say we can just build houses and not bother our heads about the education of the children who live in those houses. Hon. Members opposite know this perfectly well. They know perfectly well that when an estate is built the residents ask, "What about our schools? What about our hospitals? What about our shops? What about our health centres?" Families cannot do without schools; they cannot do without nursery schools; they cannot do without the centres. Let us understand this position. We have to provide some of these, because a large number of women go out to work. The young men and young women who live in the houses that we build and who have children and who go out to work, have to have their children looked after while they are away.
I want for a moment to deal with what I consider to be one of the most important pronouncements in the Gracious Speech. It seems to me that hon. Members opposite, with the exception of one, have regarded the Gracious Speech as being a colourless matter. I say it is a colourful Speech, and it is colourful because it contains a vital and important statement in regard to the reform of a land tenure, which ought to have been disposed of long ago. I personally remember as far back as 25 years ago that claims were made for the removal of these leasehold difficulties. I do not want to take up the time of the House too long, so I shall not, as I could do, quote from the instances which were given in a book that was published 25 years ago by Mr. Lloyd George as he then was. Let me say this. There was nobody in the country—nobody at all, so far as I remember—who then denied that the difficulties that were created for tenants in consequence of the falling in of leaseholds ought to be remedied, and remedied


as speedily as possible. Conditions are not better today.
At the height of the industrial development in this country some 99 years ago, landlords let their ground at ground rents which were in excess of the amounts they were entitled to obtain for that land, which at that time was agricultural land or waste land. Let us take examples from South Wales. It was decided to build a dock. In consequence of that, the land round that dock immediately became extremely valuable, and the landlord took advantage of it. He fixed ground rents. He made the lessees build. They had to build their houses at their own cost. He gave leases for 50 or 99 years. He made the lease conditional upon the house being kept in a proper condition right through that period by the tenant.
Roads were built; bridges were built; schools were built, and all the rest; and a tremendous accumulation of material wealth accrued to the land in consequence of the labours of those who were living in the houses at the particular area developed. Ultimately, at the end of 99 years, it was expected that all these assets should be handed back to the landlord. Indeed, that is happening every day, and it is an extremely urgent matter which ought to be attended to forthwith. Hon. and right hon. Gentlemen opposite have had many years in which to deal with the situation, but instead of doing so, what has happened? Millions upon millions of pounds have gone into the pockets of landowners who have done nothing at all to produce them. No end of people have been either thrown out of their houses on the termination of the leases or have been compelled to buy the houses at exorbitant prices, or to take further leases at exorbitant rentals. The whole situation has been entirely wrong.

Mr. Drayson: I do not know whether the hon. Gentleman is drawing a hypothetical picture or whether he is actually giving an example. Can he say which particular dock he has in mind, how that dock was financed, and the general circumstances? I think that he is drawing a general picture of what he imagines to exist.

Mr. Janner: Not at all. I would instance Barry Dock, the Cardiff area, Neath, Pembroke. In South Wales that situation prevails almost everywhere,

apart also from dock areas. It is to be found, too, in some London districts. I wish I had time to quote the instances given about Lancashire in the very Report to which I have just referred. Today, much more than half the buildings in Southport are held under the leasehold system and people can be turned out into the streets or compelled to buy at exorbitant prices when the leases fall in because the premises do not come under the Rent Restriction Acts. I have spoken about this time after time in this House. Because the rent is below two-thirds of the rateable value the lessees are not protected, and they can and often will be thrown out.
The very fact that we are, as it were, crystallising the present position by the passing of a measure is something which stands out as an historic landmark in the legislation of this country, because we shall have started something which will retain lessees' homes for them. Leaving aside the question of the 300,000 houses a year that the Opposition say they will build, what about the houses in which there are people who have to be protected from ejection?
I have been dealing with the question of leasehold reform now for the last 30 or so years. Today I find myself in a very interesting situation. The lease of my own home, which I have occupied for 14 years, has suddenly come to an end. The landlord, instead of being prepared to grant a fresh lease, has done little in the way of repairs of any sort and has refused to repair or decorate the exterior of the place—although he is under an obligation to do so under the ground lease that he holds—has said that he will under no circumstances grant a fresh lease and has practically said "If you want to have the place you must buy the house." He now has the opportunity of having the place vacant. After 14 years I must find another place. At the end of 14 years I find that at Christmas time I shall have neither a home nor the possibility of getting a home at anything like a reasonable price, because houses are being kept for sale rather than for letting.
I think the Government should consider extending the Rent Restriction Acts. I wish that in London they would increase the rateable value from £100 to £150 or £200, and in the Provinces from £75 to


£100, or higher still, so that people shall not be thrown out of their houses, and so that the houses shall not be sold. Something could thus be done towards providing the 300,000 houses about which the Opposition speak. Why is it that this situation prevails? It is because, owing to the existing conditions, houses are being kept vacant by the landlords and large premiums are being asked. Let me give one or two instances in London of offers made to me personally: Lease expiring March, 1953, a premium of £975 asked and a rental of £550 per annum; another lease with four and a quarter years to run, £900 premium, £275 rent per annum; another with 7, 14 or 21 years, £750 premium; another with two and a quarter years, £1,200 premium, £600 a year rent.
What is it all about? Why should there not be a restriction so that the middleclasses, about whom the Opposition speak so often and whose interests they pretend to be watching, could be protected? Have they ever suggested that? On the contrary. What they suggest is that the Rent Restriction Acts should be abolished.

Mr. D. Marshall: When?

Mr. Janner: I am sorry. The hon. Gentleman is right; perhaps not that they should be abolished, but that the rentals should be increased. They have never suggested that the rateable values which come within the Rent Restriction Acts should be increased, but they certainly insist upon having higher rentals so that the people will have to pay the landowner much more.
There is much more with which I should like to deal, but there is not very much time and many other hon. Members wish to speak. According to the Ridley Report, in 1939 there were 13 million houses being protected under the Rent Restriction Acts. If 13 million houses are being protected, it means that something like 39 million people are being protected against ejection. If that is so, it is essential to remove existing anomalies with regard to those Acts, and to allow the Acts to operate as they were intended. Increase protection for houses of higher rateable value and we shall have done something further towards helping to solve the serious housing problem, in

addition to the great work that we have done during these very difficult years in providing many fit and proper homes for people to live in.

7.48 p.m.

Mr. Douglas Marshall: As we are having a general debate I trust that the hon. Member for Leicester, North-West (Mr. Janner), will forgive me if I do not follow him in detail, otherwise I should make a longer speech than the House would perhaps wish. There is one point which I should like to make on his speech, and it is one which I think fits a great number of speeches from hon. Gentlemen opposite. Hon. Members opposite are inclined to advance their arguments about how appalling it is that something has not been done, entirely forgetful of the fact that for five years they have had an overwhelming majority.

Mr. Janner: That will not do at all. We have built a large number of homes, and those have been homes and not merely houses.

Mr. Marshall: I was not addressing myself to the beginning of the hon. Gentleman's speech. I was, with a certain amount of continuity, addressing myself to the end of his speech. If he wishes me—which perhaps he does not—to address myself to the beginning of his speech, I would make this one point, and one only. He rather quarrelled with the conception of certain hon. Members that the question of houses as houses was not the same thing as the question of homes. In my own view—and I can express nobody else's—a home is a matter of affection; whatever the house may be, if there is friction it is not a home.
The points I particularly wish to raise this evening flow from His Majesty's Most Gracious Speech to both Houses of Parliament. I have listened to practically every speech since the Prime Minister opened the Debate, and those to which I have not listened I have in fact read. There is one point with regard to the answer given to my right hon. Friend the Member for Woodford (Mr. Churchill) by the Prime Minister, and also the answer given by the Prime Minister to me, when I ventured to interrupt him. The Prime Minister was asked—which I think was reasonable enough—whether, at this stage of our Parliamentary life, he could state whether or not there was to be a General Election this year.
The Prime Minister made to my mind a rather strange reply. He said:
We really cannot give him an exact almanac of all these things. If I were to make a statement of that kind I should be taken to task by other hon. Members who would say, What right have you to make that statement?'"—[OFFICIAL REPORT, 31st October. 1950; Vol. 480, c. 38.]
The point that particularly puzzled me about that answer was that I had every reason to believe that in the autumn of last year the Prime Minister himself, according to "The Times" of October 14th, said:
You will have heard a statement which I have issued today in order to put an end the rumours of an immediate General Election. The widespread discussion of this was causing uncertainty which was injurious to the national effort.
If indeed the Prime Minister could say that last autumn—and there is no hon. Member in this House who can say that the uncertainty has not a bad effect upon our trade—then I cannot see the argument of the Prime Minister on Tuesday that this is the type of statement that he cannot possibly make.
The next point to which I wish to refer is in the part of the Gracious Speech, which makes reference to the white fish industry. It says:
My Government will introduce legislation providing for the establishment of an authority with powers to reorganise and develop the white fish industry, and of a Scottish Committee of that authority.
What exactly does that statement mean? There is very little controversy on this point, and I am sure that all hon. Members on all sides of this House will join with me in wishing to protect to the best of our ability this vital industry. Not only—and I have said this many times and I shall go on saying it—is it vital to our food and to the maintenance of our standard of life, but it will always remain vital to our security interests.
While I am upon that subject, there are two points which I wish to make with regard to the speech of the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes). It was for that reason that I asked him if he would mind remaining in the Chamber, and I am grateful to him for doing so. He gave me the impression, which he may not have wished to give to the whole House, that from time to time our fishermen needed encouragement to go to sea. I

want to dispel that idea straight away. The men of our country—and I am certain that the hon. and learned Gentleman will agree with me—never at any time, in any circumstances, are not willing to go to sea.

Mr. Hector Hughes: Mr. Hector Hughes rose——

Mr. Marshall: May I clear up this point and then I will give way? At the same time, the hon. and learned Member mentioned certain specific instances why particular men did not wish to go to sea. I do not know the rights and wrongs of that case. If that was a statement of the total facts, I think that the whole House would be in favour of the principle which he was developing; but there are two points which I do not understand. The first point concerns a vessel going to sea in an unseaworthy condition. I wish that the President of the Board of Trade were here, but his colleague is here and I know that he will pass this on to him. The President of the Board of Trade, together with the vast powers possessed by the Minister of Transport, has full and absolute power to see that in no circumstances does any vessel go to sea in an unseaworthy condition. The hon. and learned Member's second point was that owners or certain owners were insisting that particular vessels were to go to sea in that condition. He may say that I am wrong on this point, but, so far as I know, the question of whether a vessel goes to sea or not is within the judgment of the captain or skipper of that vessel.

Mr. Hector Hughes: I am much obliged to the hon. Gentleman for giving me an opportunity of clearing up any misapprehension that may exist. I did not for a moment suggest that fishermen were unwilling to go to sea. I know that the sea is in their blood and that they love going to sea and reaping the harvest of the sea. What I did say was that in particular circumstances created by the refusal of certain owners—and I distinguished between good and bad owners—to conform to the suggestion made by the Ministry of Transport with regard to the undesirable hab of having loose coal on board, some men had lost their lives, and that in thse particular circumstances, men refused to go to sea and were justified in so refusing.

Captain Hewitson: Is the hon. Member for Bodmin (Mr. Marshall) suggesting that the ships that are going to sea from the fishing ports are all that could be desired?

Mr. Marshall: I imagine that there is no hon. Member in this House who at any time would suggest that anything was all that was to be desired.
My next point is a specialised one. I rather regret that this matter was not mentioned in the Gracious Speech. There is no mention at all of the Report of the Mineral Development Committee. This Report is a matter of great consequence to Cornwall and elsewhere, and there is one particular point in it of which I trust the Treasury Bench will take note. Here I feel that I am going to raise a matter without any form of controversy, but that does not mean that it is not a very important matter. The last paragraph of that Report, on page 103, states:
Immediate arrangements should be made for the preservation of mining records at present in private hands.
I put a Question in the last Session on this, and I received a most unsatisfactory answer. It was an answer which made no sense at all. The answer was that it would cost a certain sum of money to set up such an organisation, which is the answer the Treasury always use when they do not want to do anything. These records, which may be of great value to the country in the future, are rapidly disappearing, and I trust that the Government will do something to carry out the recommendations contained in that Report.
It will be agreed that the most important part of the Gracious Speech is that part which states:
In order to defend full employment, to ensure that the resources of the community are used to best advantage and to avoid inflation, legislation will be introduced to make available to My Ministers, on a permanent basis but subject to appropriate Parliamentary safeguards, powers to regulate production, distribution and consumption and to control prices.
I do not know what that Bill will contain. When the Lord President of the Council was referring to the importance of such controls, and to the fact that the United States had been compelled to reinstate some of their controls, I asked him whether Regulation 58A, that horrible Regulation which cuts across all liberty and freedom, was to be included. He

admitted that it was not to be introduced in the United States. On the other hand, he did not say whether these powers would be included in this Bill. I suggested at the end of the last Session that no Government should have such powers.
I listened with interest to the speech of the Chancellor of the Exchequer. One point I could not understand was where he told us that, when it came to an estimate how much we should contribute for our defence programme, certain directions were given to the appropriate authority before the exact figures were given. The two conditions, with which I fully agree, were not to direct labour or to requisition property. If that is the view of the Government, why should they want these hidden powers which are at variance with the liberty of the British subject?
In this connection, I should like to quote one case to the House, although I admit that an apology has been given and accepted. A constituent of mine wanted a house. He found a house in which there was a telephone, which was vital to his job. He took the house, therefore, and after signing the contract it was a great shock to him to find, on visiting the house again, that the telephone had been removed. His surprise was even greater when he discovered that an unlawful entry had been made into the house to obtain the instrument. I admit at once that I have today received an apology from the Postmaster-General. His letter states:
It is a matter for regret that the Post Office engineer who called to remove the telephone obtained access to the house by means of an open window. Suitable notice was taken of the incident by the telephone manager when it came to his notice.

Mr. Shurmer: While agreeing with the hon. Member on the question of the unlawful entry, does he not agree that it is unfair, at a time when so many people require a telephone, that such a person should be given priority?

Mr. Marshall: I was not raising the question of priority.
I now want to deal, in general, with the question of the rise in prices and taxation. It will be remembered that when the Model Parliament was summoned, it was summoned in these words:
What touches all should he by all approved.
There is no one in the country who does not in some way or another pay taxation,


and it will be agreed that a great many people are being hit hard by the sharp rise in prices. The problem of the Chancellor of the Exchequer is to decide how best to deal with the conflicting priorities which face him at the present time. While it is the duty of the House of Commons to ventilate grievances, it is for the Chancellor to say what can be done.

Mr. Janner: Will the hon. Member say what he would do? Will he tell us what economies he would make, and what priorities he would give? Would he give priority to housing?

Mr. Marshall: I am just coming to that. Members will realise that I have not access to all the details.

Mr. Janner: Then the hon. Member should not make promises.

Mr. Marshall: In my opinion, it is possible for high taxation to be inflationary. I will give an instance of this to make my point. The late Chancellor of the Exchequer saw fit, earlier in the year, to reduce Purchase Tax on luxury cars. The reason for doing so was to help the trade, and therefore to help our exports to prosper. This is a case where high taxation had an inflationary effect. Similarly, I believe that the result of different forms of levies on capital is also to increase inflation. I am not saying whether this is right or not, but the one thing we all fear is rising costs and inflation.
We fear that because, with rising costs and inflation, we stand to lose our Social Services and everything else. I hope the hon. Member will at least agree that I am sincere on that point. He knows that on many occasions I have put it here in this House. It is my view that if we take a portion of capital we do two things. First of all, we frighten the remaining part of the capital and by that fear spending power flows from it. Greater inflation follows. Secondly, we lose our risk capital, and by doing that in many cases we do not develop production. I want to instance one point in this connection. Take the question of Cornish mining. If a shaft is going to be sunk and developed part of what is to be spent on it is going to be a wasted asset, and if in our method of taxation wasted assets are not taken into account to give an incentive to the original owners of the metal, then nobody is going to try to win it at all. That is a bad thing.
When we discuss methods of taxation and how our people are feeling it, we must realise that all people are sharing in it, and that the lowest income groups are going to bear a large proportion of it. If we look at the income and expenditure of the United Kingdom for the period 1946–49 very interesting figures will be found. In 1949 for taxes on income the figure is £1,337 million. Indirect taxes on consumption, such as Purchase Tax, Excise and all the rest of it, which everybody has to pay, total £1,971 million. Even after deducting the food subsidies of £531 million, it will be found that the lowest income groups are, in fact, bearing over half of the total amount of the taxation of this country.
We have got to face the defence programme, which is going to use from 7 to 10 per cent. of our national productivity. It is no use kidding ourselves that this defence programme is a quick burst, a 100 yards sprint; it is a long and gruelling race; it is a defence programme for peace and nothing is worth more than peace. We are willing to pay for it, but there are two methods. Either we are going to accept a lower standard of life—we are glad to make sacrifices for peace—or we are going to get greater production.
We cannot deal with the question of greater production in this country without looking keenly at all the restrictive practices that are in existence at present. It may be an onerous and difficult thing to do, but we have got to look at it. This is a period of full employment, and every man has got to give a full day's work to maintain the standard of life of this country as well as the peace of the world. I do not wish to keep the House any longer, but I have to give voice to the views which I believe to be true. These are the ramparts we guard; these are the treasures that we cherish. The evils of inflation are horrible, the consequences terrible. Let us see that our productivity, our work and our administration are such that the ramparts are safely guarded.

Captain Hewitson: Before the hon. Gentleman sits down, will he develop a little his cursory passing reference to the direction of labour?

Mr. Marshall: I should be delighted to do so, but in courtesy to other hon. Members who wish to speak, I do not think that this is the occasion.

8.15 p.m.

Mr. E. L. Mallalieu: These Debates on the Gracious Speech have tremendous advantages in that they allow hon. Members to deal with all sorts of subjects, and to dance in between those subjects. The hon. Member for Bodmin (Mr. D. Marshall) has talked of inflation, telephones, taxation and tenancies; and when he speaks of those who go down to the sea in ships he will always be listened to with interest and respect in this House, as, indeed, he was tonight. I thought, however, that his evasive action was rather too neat when he was asked if he was suggesting that the conditions for our merchant seamen in British ships were perfect. His reply was that, of course, nobody thinks anything in this world is perfect. I can only say to him that if he waits a few more years, during which this Government will be in office continuing their great work, he will find everything very nearly perfect.
When Mr. Speaker from time to time leaves this place and retires to the spot where he rests from our Debates, I feel he must heave a sigh of relief, and that when he returns along the corridors with his stately progress to this sort of Debate he must be wondering to himself, "What on earth will these fellows be talking about when I get back?", so great is the variety of subjects with which we can deal.
I propose for a very few moments tonight to return to the question of foreign affairs, which was touched upon earlier today and yesterday. At the outset I should say that I most certainly do not claim to be an expert in this particular subject. Nonetheless, I hope the views which I shall express will not be listened to with any less attention by the Front Bench because of that. Indeed, I believe that our leaders, who are, at present, responsible for formulating our policy in foreign affairs, are very anxious to hear the views of the ordinary man on the subject, partly in order that they may make their policy conform to public opinion; and partly to educate public opinion towards the policy which they have patiently thought out and most skilfully formulated.
Out of this vast domain of foreign affairs I want to deal with our policy towards Asia. That gigantic, smouldering continent, with its teeming millions of humanity, stands at present at the cross-

roads of history. We should be given a due share of the credit for the fact that today she does stand at those crossroads. For generations we have been sending to Asia our traders, our administrators and, indeed, our educators. I am glad to note that the traffic has been by no means one way. The House will have in mind the fact that Gandhi was called to the English Bar, and Nehru, the present Prime Minister of India, was himself educated, as the expression goes, at Harrow: Cambridge is proud to claim him as one of her distinguished sons, and upon him she may yet confer the greatest honour that is within her patronage.
For the benefit of those hon. Members who did not have the privilege, as I did this summer Recess, of attending the annual conference of the Inter-Parliamentary Union which was held in Dublin, I would explain that there came to the conference this year delegates from all the new Asian parliamentary democracies—from the Philippines, Siam, Burma, Ceylon, India and Pakistan. They were all there this time. With one accord they laid stress upon the seriousness of the position in Asia. I think I am correct in saying that they were unanimous in ascribing that situation to the lamentably low standards of living of the people in those countries.
It seems a bit hard to some of us to explain how it is that these peoples, who have so lately won Parliamentary democracy, should appear to be prepared to throw away that great privilege for which they have been struggling for so long, in favour of some totalitarian form of Government. I can remember a delegate from Ceylon at that conference who read the most lurid reports of food riots presently taking place in his part of the world. When one thinks of such reports one can see how it comes about that those peoples may be prepared to sacrifice their Parliamentary democracy. It was made plain to us that, although the peoples concerned knew very little indeed about the doctrines of Communism, yet they would be prepared to exchange Parliamentary democracy for some form of totalitarianism, because Parliamentary democracy had, in their opinion, been synonymous with starvation; whereas it was not realised that totalitarian Communism might be even worse than the Parliamentary democracy from which they felt they had suffered. That was an


extremely serious state of affairs, and one which I thought worthy to be emphasised again in this House; although I know that it has been touched upon before.
It was very encouraging to me yesterday to hear the Under-Secretary of State for Foreign Affairs describing how, on Commonwealth initiative beginning with the Colombo Conference in January of this year, there had now been issued a unanimous report by the Commonwealth Consultative Committee which met in Sydney and again, I believe, in Colombo. It had now given this unanimous recommendation showing how the Commonwealth in concert could make an attack upon the poverty of these regions of the world. They said that it could be done by providing training facilities and technical aids, as they are sometimes called, and by providing means organised by a bureau to be set up in Colombo itself whereby the development of those countries could be facilitated. I hope that the Government will press on as fast as possible, in conjunction with the other Commonwealth countries, with the carrying out of the recommendations of that report.
In the political field, which is, of course, very important, immense strides have been made in Asia since the coming into power in this country of a Labour Government. There have been immense strides and demonstrations of goodwill. It was most gratifying to hear delegates at the Inter-Parliamentary Union conference showing, in response, a goodwill towards us. They were responding to the gesture which had been made in the most practical way by our Government, in India, Ceylon, Burma, and Pakistan. The goodwill which has been generated has made possible a realistic co-operation which would have been undreamed of some years ago. Centuries of Imperialism, paternal if you will, might well have left a situation in which we simply could not have come near enough to those peoples to attempt to co-operate with them. Now we have, I feel, the chance to show them that we are willing and able to help the nascent, liberating forces of Asia towards real emancipation through economic stability.
We must make our purpose demonstrably clear. We must make it clear that we are not seeking their help merely to use them as potential allies in a war which we think is coming. We must make

it clear that we are not just blindly following those irresponsible forces in this country and in America which believe that a war with Russia is inevitable and would prefer it to come sooner rather than later. We must make it plain that we want their friendship, not against anyone, but in order to preserve peace, believing that the more of us there are the more likely peace is to be preserved.

Mr. Osborne: Would the hon. Member be good enough to tell the House who he thinks in this country is saying that war with Russia is inevitable, and who wants it to come sooner rather than later?

Mr. Mallalieu: I do not think anybody in a responsible public position has said it, but I should be very surprised if there is any hon. Member in this House who could say from his experience that there are not some individuals—happily they are few in number in this country—who say it. Whether it be true or not that there are such people in this country, we know from the propaganda of certain outside bodies that these people are supposed to exist. I want it to be shown that we at any rate have no truck with them.
I think that the Government acted not only with great courage and correctness but entirely in keeping with the spirit of their own principles when they recognised the Government of China as the actual Government. That is so still, in my mind, in spite of the fact that since that recognition the Government have encountered great difficulties and have not yet made any real progress, I believe through no fault of their own, towards establishing diplomatic relations between the two countries.
I was rather sorry that the right hon. Member for Saffron Walden (Mr. R. A. Butler) intimated yesterday that in his opinion, partly because of those difficulties, this recognition should not have taken place. I hope that the Government will pursue with great and continued patience the course on which they have started, until they have forged the normal diplomatic links between our Government and the Government of China.
Quite plainly, the keystone of our policy with Asia should be a policy of complete friendship and of the maximum of understanding with India. I feel that India and the rest of the Commonwealth are extremely fortunate in having at this


moment a man like Pandit Nehru as Prime Minister of India. His remarkable qualities, his Asian consciousness, may very well make possible that mutual understanding between the East and the West upon which so much depends for the future peace of the world. Among his many statesmanlike qualities I should like to single out the remarkable capacity he has for regarding as his friends those whom less practical men, Irishmen for example, might remember only as their former enemies. He seems to have overcome that in a remarkable manner, and I have no hesitation in hailing him as the Jan Smuts of India.
I hope that the Government will realise that one of the foremost achievements which we, their supporters, will expect from them in the realm of foreign affairs is that they succeed in convincing India that our interests and India's interests coincide, and that her purpose and high aspirations are ours.

8.31 p.m.

Sir Harold Roper: The hon. Member for Brigg (Mr. E. L. Mallalieu) has spoken with great sincerity of his experience in relation to the Dublin gathering of the Inter-Parliamentary Union. I have served for many years in one of those legislatures—in Burma—by which we have been developing, in those countries to which he has referred, that democratic form of constitution of which he has spoken. During those years which I spent, partly in the Senate and partly in the House of Representatives in Burma, our relationships in those Houses were very much like our relationships here in this House. We took sides on the Floor of the House but outside we were all friends together.
I wish to make one observation arising from the hon. Member's comments. He rightly stressed, and the danger that the failure of democratic government to overcome that poverty might lead to Communism. There is great poverty, and there has been great hunger in India and in the countries of the Far East, particularly in the years following the war. It is important that hon. Members should realise that the reason for that has largely been the effect of the disruption that occurred during the war.
When considering the part which the British have played in developing the democratic spirit and a democratic constitution in India, and the success under British rule in improving the standard of living of the people there, never let it be forgotten that it was British rule which, in the last half of the last century, before democracy had fully developed, saved India from one long succession of famines. We must never forget that when we refer to the poverty in India. It is well recognised by those who have lived there that one effect of the improvement which we have effected in the standard of living of India's people by abolishing famine has been vastly to increase the birth rate. Every year India is faced with the appalling problem of an additional five million mouths to feed. That is the problem which has to be faced in India and it is too often overlooked on the Floor of this House.
I wish this evening to raise a point which is not covered by the Gracious Speech, and to speak about the metal mining industry in this country, particularly the Cornish tin mining industry. It is of local importance because of the valuable employment it gives from time to time, both directly and indirectly, through the industries that have grown up in association with it. I wish to approach it not from the local angle, but from the national angle. I would stress that there is an aspect of national importance in this Cornish tin industry. In the face of what is happening in the tin market in this country today, it will readily be recognised by the Government that tin is a commodity of great value to this country, because of its dollar-earning capacity.
Another point is the function of providing a training ground for mining engineers. That point appears perhaps to be a minor one, but it has a wider importance, because from it springs a substantial trade in mining machinery and equipment. The mining engineers go abroad from Cornwall over the world, and they buy from home the machinery and equipment to which they have been accustomed. Through them quite a valuable export industry has developed. During the last 12 months the value of mining machinery manufactured in Cornwall and exported has amounted to just on £2 million.
For the maintenance of that export trade it is necessary that there should be an industry in operation. We must have a working industry; it is essential, both for the training of the men and for the development of that machinery. For if the mining industry is allowed to die, surely that manufacturing industry dependent upon it must first stagnate and then gradually fade away. On those grounds I would stress the national importance of paying some attention to this particular industry. Recommendations for Government action were published in the Westwood Report. I by no means accept all the recommendations in that Report, but it is an attempt at a solution, and because it is an attempt at a solution it merits very close attention by the Governmen. I regret that there is no mention of it in the Gracious Speech.
I do not propose to discuss the Report in detail. My purpose in raising it is to show the reason why action should be taken. In the first place, we do not know how much tin there is left in Cornwall, and it is just that lack of specific knowledge which makes it so important that the Government should give attention to it. Having regard to the history of the industry, I believe that there is a fair prospect that below the ground in Cornwall there is still an asset of great potential value. The cream, undoubtedly, has been taken off, but I believe that there is a prima facie case to suppose that plenty remains. I hope to make it clear that the time may not be far distant when there will be a strong case on economic grounds for resuming development on a much larger scale than that which is being carried out at present.

Mr. Jack Jones: Would the hon. Gentleman tell the House whether he would advocate that the Government should take action with this industry if it were in a flourishing condition; or is he advocating that the Government should do as we did with the coalmines, take over something which is uncertain from an economic standpoint?

Sir H. Roper: I think that point will be covered if the hon. Gentleman will allow me to develop my theme in my own way. This is not a party question. I am speaking on the subject because it is a matter of national importance, and I

hope that there will be a large measure of agreement on both sides of the House.
What is immediately important is that we must realise the need to look ahead. Wise action today may well reap a rich reward in the days to come. The first point, and one mentioned in the Westwood Report—I put it first because it is of great importance and because it is a simple point which can be dealt with at small expense—is that the fullest possible record should be kept of conditions underground. It is not sufficient merely to register and to collect the mining plans. We want more than that. We want the fullest possible information about what is left underground. I was shocked when, some six months ago, in reply to a Question, the Government refused to consider making proper arrangements for the preservation of these records. They stated that it could not be done without an addition to the staff, and they were not prepared to engage additional staff. The preservation of records is a most important essential in any industry where, particularly in the absence of specific information, there must be study. Those records may be of incalculable value in the years to come, and they must be preserved.
Then there is another most important aspect—taxation. My hon. Friend the Member for Bodmin (Mr. D. Marshall) referred to the taxation of a wasting asset. I hope that the Government will pay special attention to that point. The high rate of taxation which we have today makes it virtually impossible for anyone to carry on successfully in such a highly speculative activity as the Cornish tin industry. Clearly, there are difficulties and clearly there are objections to according to the Cornish industry preferential treatment; but if the Government want the golden eggs they must be prepared to do something to keep the bird alive, and if they are likely to want tin, then they will have to do something about it.
Personally—I speak personally because there is a difference of opinion—I should like to see the establishment of a mineral development commission to look after this Cinderella of our British industries. The appointment of such a commission is one of the recommendations of the Westwood Report. It need not necessarily be a highly expensive organisation. That depends on its functions, and what


its functions would be are a matter for consideration. I do not go as far as the recommendations of the Westwood Report, but we should bear in mind that, in other countries—Canada, India, Australia and the United States—governments play a considerable part in active operations in looking after their mineral industries. They are prepared to go to considerable expense to dress the shop window of their mineral resources.
Clearly, in this country there are strong financial reasons for thinking for a long time before we adopt such an active policy, but even if we cannot afford the heavy expenses such as these other countries incur, at least, I do believe that there is a useful part to be played by a mineral development commission to look after our Cornish mining industry. I do not accept the view that the fact that it is expensive is a justification for doing nothing. The Cornish industry is very old. We have been getting tin from Cornwall for over 2,000 years. It once came from alluvial deposits in Cornwall which long ago became exhausted, and the fundamental reason for the low ebb of the Cornish industry today is that the deep-seated tin, which is all that is left, cannot compete with the cheaper tin produced from alluvial deposits in Malaya and other countries.
Every year since the war, the experts have been warning us that world reserves of tin are limited. I am not qualified to express an opinion on that. There are obvious difficulties in regard to deep-seated tin. Alluvial tin is much more readily assessed, and I see little reason to doubt the advice of the experts that, before many years, the alluvial deposits will show signs of exhaustion. When that time comes, we must expect the general price level of tin to be stabilised at a higher level, and Cornish tin will then come into its own again.
The Westwood Report makes clear that many of the mines in Cornwall were shut down for reasons other than the fact that the tin was exhausted, so we must see that, when the time comes when the price of tin is stabilised at a higher level, we are ready for it. We must avoid the position, towards which we appear to be drifting at the present time, where, on the one hand, we have little idea what reserves——

Captain Hewitson: Can the hon. Gentleman tell us the present price?

Sir H. Roper: According to this morning's paper, £1,000 per ton, but I do not base my argument on that. If we can be sure of maintaining the price of £1,000 per ton, there would be good cause for going ahead today and spending money on the Cornish tin mines.
The main point I wish to make is that we must not allow ourselves to get into the position in which, on the one hand, we have little idea what reserves of tin we have, and, on the other, the skilled mining labour is being dispersed to other industries. The responsibility rests with the Minister of Fuel and Power, and I am sorry that he is not in the House today. I hope that somebody on the Front Bench will give us an indication of what the Government's intentions are—what their attitude is to this Report—and whether they agree with the general picture I have outlined as to the long-term prospects and the necessity of giving attention to the industry.

8.50 p.m.

Mr. George Thomas: The hon. Member for Cornwall, North (Sir H. Roper) will, I know, be conscious of the fact that we have been hanging on every word he said tonight. His was the voice of a master of the art, and I wish to assure the hon. Gentleman that I was impressed by the specialist knowledge which he brought to the subject, although I confess that, to me, he seemed a long time in reaching his main argument.
In the brief time at my disposal I want to refer to a question of vital importance to the part of the world from which I come, but before I do so I want to note with interest that the Debate has succeeded in obtaining from the other side of the House today a very important statement from the right hon. Member for Aldershot (Mr. Lyttelton). There will be considerable feeling in the world of education that the Conservative Party have selected education as their priority, No. 1 for any cuts should they be returned to power. The right hon. Gentleman said quite clearly that if any cuts were to be made in order that 300,000 houses could be built, education might have to suffer—education sprang naturally to his lips—and technical schools which, apparently, are of no importance, would have to take


their place away back in the queue. The hon. Member for Epping (Mr. Nigel Davies) had other priorities for cutting down. He chose food subsidies and the Health Service. The Debate has been useful if only for the fact that it has brought out those priorities.
In South Wales there was considerable delight at the fact that the King's Speech made reference to the question of leasehold reform. A wave of hope has gone through South Wales because we suffer much more than most other areas from the grievous problem of absentee landlords who are only waiting to filch from honest people the homes which they have already bought and maintained. I have with me some correspondence which I have received from the Labour Party and from independent auctioneers, surveyors and valuers, each of whom complains that whole estates in South Wales have been put up for auction and sold at prices far beyond the pockets of the owner-occupiers who are mainly old age pensioners. I have heard a great deal about the pensioners, and, like everybody else, I realise that the pensioner is passing through a difficult time. But those who have struggled to buy their own homes feel very bitter indeed at the way in which those homes are taken from them when the leases expire.
It is not only a question of taking away the lease of the property from the person when it expires, but of the onerous conditions which are imposed under the lease when it is in operation. For instance, in the Cardiff, North Division, during the last General Election, a young man had the temerity to put in his window a bill supporting the Labour candidate. He received from the ground landlord notice to say he was breaking his contract with him by revealing his political opinions in such a way. The idea that victimisation has died out is by no means correct, and, in industrial South Wales, we have sufficient and abounding evidence that the present leasehold system, weighted in favour of the great landowners and financial corporations of the country, works every time against the honest citizen who wants to protect his home.
It was said from the other side that we have had five years in which to get on with this job. But we have had complaints from the other side that we were

getting on with too many jobs, doing too many things and passing too much legislation in the last Parliament. I only wish the Government had dealt with this problem then; but between now and Christmas a large number of homes in Cardiff will be lost to a financial corporation if the Government do not protect the people. There are shops which will be taken over by a corporation which is not in the slightest degree interested in Cardiff but only interested in what it can make out of Cardiff and Cardiffians. There is the same problem in Aberdare, in Pembrokeshire, and in the whole of South Wales.
If this standstill Measure is introduced, I hope the Government will also see that there is no increase at all in the ground rents which will have to be paid for the period in which the lease is frozen, as it were. This will cost many millions of pounds but, if hardship of any sort is to be inflicted, then I suggest that the first people to receive the consideration of this House must be the owner-occupiers of property. In dealing with this question, the Government will give to the people of South Wales and, I believe, to the people of Lancashire and London as well, a measure of freedom from the legalised blackmail allowed by the present system—a freedom they have never enjoyed before. In the one minute left to me——

Mr. Shurmer: Two minutes.

Mr. G. Thomas: My hon. and noisy Friend is very helpful. In the two minutes left, I want to refer to homes that are in danger of being lost and the tremendous housing need in Cardiff. Hon. Gentlemen opposite left us with a problem. We are trying to clear it up. There were 17,000 people on the waiting list in Cardiff in 1939, when building workers were walking the streets unemployed, and when materials were plentiful and cheap. Today, it hurts me to see the Prudential Assurance Company having a licence to erect a tremendous structure, nine-tenths of which, I understand, is to be allotted for Government offices. Rents, of course, will be drawn by the Prudential, a very good investment on their part.
I believe there is no moral justification whatsoever for allowing offices to be built before homes. I very much prefer overcrowded offices to overcrowded homes, but I am asking for more controls on the


builder. I am asking that fewer licences be granted. If the policy of the Opposition were adopted, then indeed far more luxury offices would be built than dwellings for the people. I ask the Government to bear in mind that the presence of controls in the building industry is not enough; they must be rigorously and severely applied.

9.0 p.m.

Mr. Osbert Peake: I must first express my obligation to the hon. Member for Cardiff, West (Mr. G. Thomas) for having compressed his remarks, which we would gladly have listened to for longer, in order to enable us to adhere to the timetable which has been informally arranged. May I say that I hope to leave more than half of the hour remaining to us to the President of the Board of Trade if I am not unduly interrupted.
We have listened today to a reasonably large number of interesting and sincere speeches, some on the general and some upon more particular aspects of our economic situation. I think it is 19 years since I sat on this side of this House, though not so long since I sat upon the other. I should like one of my first observations here to be to say how much we regret the enforced continued absence of my right hon. Friend the Member for Bristol, West (Mr. Stanley). His unchallengeable integrity has earned him the respect, I think, not only of his colleagues but of his opponents. [HON. MEMBERS: "Hear, hear."] We on this side sorely miss his counsel, and I am sure the whole House misses the illuminating shafts of wit and wisdom with which his speeches are always adorned.
We also miss, and deeply regret the causes which have led to the retirement of, Sir Stafford Cripps. Our Parliamentary life is the poorer for his departure. His mantle has fallen upon the right hon. Gentleman, my neighbour, the Member for Leeds, South (Mr. Gaitskell). He has a heavy burden to carry which excites our sympathy rather than our envy. We think he has a thankless and a difficult task immediately before him, and we wish him well in it.
The economic outlook today, like the international outlook, is a bleak one. The

Chancellor of the Exchequer, in the Debate on 13th September, said:
Measured by normal standards, our economy is rather fully stretched."—[OFFICIAL REPORT, 13th September, 1950; Vol. 478, c. 1144.]
I think that is an under-statement rather than an over-statement of the case. I want to examine for a moment the effect of the rearmament proposals upon our rather stretched economy. My first observation is that in my opinion—I have said this many times—we have had very poor value over the last five years for the very large sums we have expended upon national defence. To have been spending between £700 million and £800 million a year and to have so little to show for it indicates that there has been serious mismanagement of our defence policy in the last five years.
If I understand correctly the statement made in the Debate of 13th September by the Chancellor, as he now is, in addition to the present figure in this year's Estimates of £780 million, the new programme means that we shall have to spend an additional £70 million in the current year, and an additional £220 million in the year 1951–52. Those figures can be calculated from column 1133 of HANSARD for 13th September. I am sorry that the Chancellor is not in his place, because I wanted to put to him one or two points upon the statement he then made. Perhaps the President of the Board of Trade will make a note of those points, for they are of some importance.
On 13th September, having given us the make-up of the total expenditure of £3,600 million on defence over the next three years, the Chancellor went on to say:
I see no prospect of the final figure for this year's Defence Estimates being less than £850 million, and no chance whatever that next year's Defence Estimates will fall short of £1,000 million."—[OFFICIAL REPORT, 13th September, 1950; Vol. 478, c. 1133.]
In view of the fact that this year's Estimates are for an original £780 million, that clearly means an additional £70 million to be spent during the current financial year, making the £850 million which the Chancellor mentioned, and an additional £220 million over and above this year's estimated figure during the year 1951 to 1952.
I find great difficulty in making those figures square with the Chancellor's


acceptance today of the figures quoted by my right hon. Friend the Member for Aldershot (Mr. Lyttelton), who said that the total expenditure to fall on the Budget over the next three years would be £1,200 million. When I read the present Chancellor's statement of 13th September, I thought it was clear that the £1,200 million to be spent over the next three years was beyond our capacity and that we could spend it only if we obtained aid from the U.S.A. In fact, that was clearly stated by the Prime Minister in the House only two days ago. As reported in column 34 of HANSARD for 31st October, the Prime Minister said:
Last September we announced a three-year programme totalling about £3,600 million and we stated that we could not carry this out ourselves alone; that that was not physically possible. We then discussed that with the Americans, and we are making good progress about the immediate assistance they can give on an interim basis."—[OFFICIAL REPORT, 31st October, 1950; Vol. 480, c. 34.]
That was as far as military aid was concerned, and, reading that statement by the Prime Minister in conjunction with the Chancellor's statement that our Defence Estimates for this year would be increased by £70 million and that the Estimates for 1951–52 would be increased by £220 million, it appeared that the total to fall upon our Budget over the next three years would be substantially less than £1,200 million owing to aid from the United States. Today the Chancellor appeared to accept the figure of £1,200 million as likely to fall upon our Budget over the next three years.
I believe these figures require some further elucidation. We ought to know to what extent the American aid for which we asked in September will be in kind and to what extent it may be given in dollars. The Prime Minister went on to tell us two days ago, only a few minutes after he had made the remarks I have quoted, that the economic position had altered. This was in regard to Marshall Aid. He said, as reported in column 36 of HANSARD:
Therefore … it has been agreed with the United States Government to review the question of Marshall Aid … in the light of all the relevant factors; and the talks will shortly take place."—[OFFICIAL REPORT, 31st October, 1950; Vol. 480, c. 36–7.]
That is to say, at the same time as aid, either in dollars or in kind—and it is not clear to me which—is contemplated for

defence purposes, talks are going on with the United States with a view to a curtailment of dollar aid under the Marshall Plan. I hope that when the Government reply tonight we shall be given some elucidation of these figures.
If I am right about my view of the programme—that is to say, that something considerably less than £1,200 million will form the additional expenditure we have to undertake over the next three years, and that the burden upon our Budget will also be something less than that figure—then I do not think that the programme should be beyond either our financial or our physical powers. It certainly does not exceed the increase in our annual productivity, if productivity has been correctly estimated in the past.
I should like the President of the Board of Trade, who no doubt knows more about these indices of productivity than anybody else, to give us a little more factual information on how they are compiled. It seems to me that there are grave doubts entertained by all orthodox—and, indeed, unorthodox—economists as to how the indices of production and productivity are calculated, and it is difficult to understand how it is made out by Ministers that productivity, or even production, in this country today is some 30 per cent. or 40 per cent. in excess of what it was in the year 1938.
If, for example, we look at either the production of coal or the production of houses, we know that both production and productivity are at a very much lower rate, and it therefore must be that the rate of production and productivity in the lighter engineering industries, which are the ones most concerned with this rearmament programme, must have grown, if the overall figures of the increases are correct, at a startling and a phenomenal pace. I hope that the right hon. Gentleman on some occasion, when he has time, will give us some more information on how the indices of production and productivity are built up. My view is that they are built up very largely upon values of production, which are then whittled down by virtue of the change in the price level between the years concerned. I should like the right hon. Gentleman to give us some more information upon this question of how productivity and production are calculated.
In my opinion, the financial problems connected with rearmament are more difficult than the physical problems. I think that the industries concerned can absorb the orders over the next three years which are likely to be given upon the figures hitherto disclosed. Next year, according to the Chancellor, we shall have to find out of the Budget for rearmament only £220 million over and above the present figures—an additional £220 million; and that is not a very large sum. In fact, some people may think that we are not progressing swiftly enough with the rearmament programme unless a larger figure than that can be achieved.
But whatever the figure may be, whether it be £220 million of £250 million, I am quite convinced that that figure could and should be achieved by savings in Government expenditure. Government expenditure today is nearly £4,000 million, and I do not believe that a saving of £220 million on that figure is by any means beyond the Chancellor's capacity to achieve. I am sure this is the only way in which this additional money for armaments can be found without very grave damage to our economy as a whole.
I do not believe that the extra money can be raised without grave damage by means of additional taxation. My right hon. Friend the Member for Aldershot made it clear, with some detailed arguments which I will not repeat, that there is no taxable reserve available in the country at the present time. The ex-Chancellor of the Exchequer, Sir Stafford Cripps, claimed that the remissions he had made on the Income Tax over the last five years formed a reserve of taxable capacity. Does anybody contemplate the withdrawal of the additional allowances for earned income and the lower rates of tax which have been brought into force for the lower sections of the Income Tax-paying community? I do not believe anybody, in any quarter of the House, would for one moment contemplate a withdrawal of these income allowances and concessions which had been made.
So far as industrial profits are concerned, Sir Stafford Cripps repeatedly explained to us in the House that today 60 per cent. of industrial profits went in direct taxation. The hon. Member for Coventry, East (Mr. Crossman) said in

his speech this afternoon that Income Tax had gone down since the war from 10s. to 9s. in the £1, but he completely failed to note that Profits Tax has taken the place of Excess Profits Tax, and that today all industrial profits bear a heavier rate of tax than they did during the war; and that rate, as stated by Sir Stafford Cripps, is on the average 60 per cent. Sir Stafford Cripps went on to say that another 20 to 25 per cent. of net profits was required for maintaining productive capacity, and that of the balance of 15 or 20 per cent. of net profits which were distributed, a large portion was subjected to Surtax. His conclusion was that there was nothing much more to be had from the profits of industry.
I believe that taxation of all kinds, direct and indirect, is already at an inflationary level. Savings have been discouraged: they have not only fallen, but small savings have disappeared and show a debit balance. Spending has been encouraged by the steady fall in the value of money, and the new Chancellor has stepped into the shoes of Old Mother Hubbard. The Lord President of the Council, who was in holiday mood, as usual, at the annual conference at Margate, boldly refused to accept a motion, strongly pressed from the body of the hall, for repudiation of the National Debt. In refusing that motion, the Lord President said that there were many tempting avenues of taxation open to a Socialist Chancellor of the Exchequer. Well, I should have thought that the ground had been fairly well ploughed already by the two previous Socialist Chancellors. If the Lord President has any good ideas, I only hope that he will pass them on to his right hon. Friend the new Chancellor of the Exchequer.
The hon. Member for Devonport (Mr. Foot) and the hon. Member for Coventry, East, both asked that we should have another capital levy. The hon. Member for Coventry, East, remembering that Sir Stafford Crips had promised that this levy would be once and for all, suggested that the best way to get out of this difficulty caused by the late Chancellor of the Exchequer's pledge was to call the new capital levy by a new name. He thought that that would be a good idea and would get the Chancellor out of his difficulty, and he thought it such a good idea that he suggested that the capital levy should now become an annual event.

Mr. Crossman: During rearmament.

Mr. Peake: I should have thought myself that nothing could be better calculated to cause a flight of capital from this country to every quarter of the sterling area than the suggestion that a capital levy should be repeated annually. The hon. Member for Coventry, East, seems to have forgotten the Socialist technique when they want to break their pledges. Surely he must recall that, when the Socialist Party put their name to the document agreeing to the continuance of university representation in this House, the Lord President of the Council invented a much more ingenious reason than the one which the hon. Gentleman now suggests. He did not want to change the name. He said that one Parliament does not bind another, and that a pledge given in 1944 does not bind a Parliament elected in 1945. May I commend to the hon. Member for Coventry, East, that in future he should stick to the line taken by the Lord President of the Council and not try to invent ingenious reasons of his own for breaking pledges, which do not seem quite so convincing as the one put forward by the Lord President of the Council.
In my opinion, we must look to Government saving to provide the necessary finances. I advise the Chancellor, if he finds the cupboard empty, as I have just described, and he finds it a little difficult to think of economies totalling up to the necessary £220 million during the financial year 1951–52, not to look into the cupboard, but look into the Treasury pigeonholes, because there he will find a list of economies propounded in October last which has never yet been made public. It was drawn up, according to his own statement by the Lord President of the Council, following the devaluation crisis of 1949. The Government then produced a list of economies. It totalled, I think, £250 million, including cuts in the capital programme. The economies on the Budget totalled about £100 million. Those, I take it, have been carried out. When the Budget and the Appropriation Accounts appear, we shall see whether these economies have, in fact, been achieved.
The Lord President of the Council went further. He was criticised very strongly because the Government's list of economies was inadequate. The Lord President declared roundly in this House in self-defence that if any one thought

that the Government had come to the end of the economies they were going to propose, he would be very quickly disillusioned. So there is this list somewhere in the Treasury. It was not produced in November, and it did not come out, curiously enough, on the eve of the General Election, when we rather expected it might, and we have been waiting and pressing for it ever since. If the Chancellor of the Exchequer is in any real difficulty as to what economies ought to be made, let him give up asking us on this side of the House to give our suggestions; let him just inquire of the Lord President what his list is and to what total it amounts.
I do not want to be very much longer, and I will cut out what I was going to say about the effects of devaluation. I want to say a word or two, however, about the rising cost of living. There seems to be great confusion among Ministers upon this question of the rising cost of living. They seem to speak with so many different voices. On 4th October, again at the Margate conference, which I always follow with close interest, the Colonial Secretary, winding up a debate dealing with economic and social policy, said:
The Labour Party was aware that the increased cost of living was causing perturbation and anxiety. They recognised it was for them to take all steps in their power to deal resolutely with the problem of prices and the cost of living.
But he did not consult the Chancellor of the Exchequer before he made his speech, because the Chancellor spent nearly half an hour trying to persuade the House that the rise in the cost of living over the last 12 months was only one point; he told us that we might expect a further one point increase by Christmas, 4d. in the pound, which is all the change is according to the Chancellor of the Exchequer. Yet, according to the Secretary of State for the Colonies, this is causing the Labour Party "perturbation and anxiety."
The hon. Member for East Ham, North (Mr. Daines), who is a co-operator and ought to know all about these things, in the first speech made from the Labour benches after the Prime Minister had spoken on Tuesday, devoted himself to nothing but his anxiety about the rise in the cost of living. Even the Lord President of the Council has got on the


wrong foot about this, because, in his broadcast 10 days ago, he devoted part of his speech to an apology for this increase in the cost of living.
The cost of living had, of course, gone up. Earlier this year there was a tendency for prices to ease, but the Korean War had put a stop to all that.
So, it is the Korean War that is causing this "anxiety and perturbation" in the Labour Party. However, it is all quite unnecessary, because the Chancellor of the Exchequer tells us that it has simply not taken place at all.
No doubt, the President of the Board of Trade will have something to say about this later on. I have had an opportunity of a little preview of his speech, because it was in the "Daily Herald" last Tuesday The headlines on the front page—I must confess it gave me some anxiety when I read it—were:
Truth about the Cost of Living.
Harold Wilson talks to Women of the things that Women talk of.
I confess that when I started to read the article, although I am a strong believer in the liberty of the Press, I thought that on this occasion the Press might possibly have gone too far. However, I am glad to assure the House that there is absolutely nothing in the "Daily Herald" article which the right hon. Gentleman could not say without a blush in the House. He will, no doubt, do so, because when he talks about the cost of living, he makes a comparison with what the Tories would have done had they been in office, with copious references to the bad old days of Socialist mis-rule between 1929 and 1931.
One word about this King's Speech, which is the subject of our Debate. It contains a number of proposals, which have been in King's Speeches ever since I got into the House, such as those about white fish and river pollution, and I hope it is not out of order to describe them as footling proposals in the Gracious Speech. If it is, I will withdraw and try some other epithet. I think the operative words are those which refer to the Supplies and Services Act. We are told that legislation will be introduced to make controls permanent "in order to avoid inflation." The author of this document must have had his tongue in his cheek when he wrote that. For five years since the war we

have had the most severe controls and continuous and progressive inflation. The fact is that we cannot control the general price level by Acts of Parliament or regulations. The hard fact is that we must look to renewed effort, increased efficiency and increased productivity for a solution of our difficulties.
I believe that the Prime Minister lost a great opportunity when last February's election resulted in a deadlock. He could have become at this moment of danger the leader of a united nation. It is not too late yet, but in my opinion there are two requisites to fill that position. The first is that the Government should use their powers to postpone—not to repeal—the operation of the Iron and Steel Act, which can only dislocate a vital industry at a critical time, and cannot add an ingot or a sheet to our re-armament programme. Secondly, the Socialist Party should declare what are the limits of their ambitions for further measures of nationalisation. There has never been an official repudiation of the Marxist policy of the nationalisation of all the means of production, distribution and exchange.
Nationalisation has failed as the people well know. Very grave consequences to industry follow from continuous and continued uncertainty. In the interests of national unity at this dangerous time, I ask the Government to postpone iron and steel nationalisation, and to declare the limits of their nationalisation proposals. We have supported the Government in their foreign policy and in defence. I do not ask them in return to give up any of their principles, but to postpone one item in their policy, and to make a clear declaration of their future intentions in order to abolish that uncertainty which is most injurious to industry and to trade.

9.35 p.m.

The President of the Board of Trade (Mr. Harold Wilson): I shall try, in the time that the right hon. Gentleman has left me, to deal with as many as I can of the points which have been raised today. I should like to begin by associating myself with what he said about what we all feel about the retirement from public life, temporary we hope and trust, of my right hon. and learned Friend, Sir Stafford Cripps, and also with what the right hon. Gentleman said about the continued absence of his right hon. Friend


the Member for Bristol, West (Mr. Stanley). I can assure him that on all sides of the House we are in full accord with everything that he said.
The right hon. Gentleman went on to say that he had regarded the speech I made on Monday as a preview of the one I was going to deliver, and that he had found that I did not cover some of the points which he had wished to raise. He was not right in thinking that that speech was a preview. Tonight I shall deal with the subjects which have been raised in this Debate.
I was a little surprised at the concluding reference which the right hon. Gentleman made to the Gracious Speech. Some of it was common form, he said, particularly about white fish and river pollution. He had seen those matters in many a Gracious Speech for many years. The right hon. Gentleman should have realised, after his experience of the last five years, that when we put proposals before this House, as when we put them before the electorate, we proceed to carry them out. That is the reason why he has seen these matters so many times in past speeches from the Throne. [Interruption.]

Mr. Braine: Mr. Braine rose——[Interruption.]

Mr. Speaker: The hon. Member must not generate more indignation than he can contain.

Mr. Wilson: The right hon. Gentleman went on to describe the measures that had been taken in regard to an industry which had been long neglected over many years before the war. I hope that he will go and make those same remarks in some of the fishing ports, when some of the electors will be very glad to hear what he has to say. I should like to refer to the maiden speech made by my hon. Friend the Member for Camlachie (Mr. W. Reid) who raised a question, from his own personal experience, involving real social tragedy. I do not propose to reply tonight to what my hon. Friend said, but my right hon. Friend the Secretary of State for Scotland will no doubt be taking an early opportunity of dealing with the points which my hon. Friend raised.
Let me turn to the economic questions which have been raised today, yesterday and the previous evening. First of all, there has once again been much discussion on the production effort of the country. I would express my agreement with my

hon. Friend the Member for Coventry, East (Mr. Crossman), that the theme of practically all the economic speeches we have heard from the opposite benches over the last three or four years has always been that we were on the verge of disaster. We are not there, but it will be coming in two or three months' time, or even three years. When the right hon. Member for Woodford (Mr. Churchill) made the speech in which he declared the Tory party's policy on controls—"Set the people free"—he prophesied that the most dismal failure in our export policy would come immediately unless we abandoned that policy and relied for our exports on the overspill from a larger home market.
Since then, as the House knows, production in this country has increased by something like 25 per cent., and exports have increased by some 70 per cent. by volume over those three years, in spite of those prophecies. [An HON. MEMBER: "Private enterprise."] A very considerable part of that increase took place before the election last year.

Mr. Braine: Mr. Braine rose——

Mr. Wilson: When we debated devaluation, the right hon. Member for Warwick and Leamington (Mr. Eden) spoke of disasters in the next few months or the next few weeks.

Mr. Braine: I wonder whether the right hon. Gentleman——

Mr. Wilson: I cannot give way to the hon. Gentleman. The right hon. Member for Woodford has made hardly a speech on economic affairs in the last two years in which he has not at the same time prophesied immediate disaster and has also compared our performance unfavourably with that of practically every other country in the world. For example, it was only a year ago, at Wolverhampton, on 22nd July, 1949, that he said:
Every one of the countries of Europe outside the Iron Curtain, including our former enemies forced to surrender unconditionally and others which had been overrun by foreign invaders, has got its life going in many ways better than we have done under a Socialist Government ….
Let us examine the facts. Let us look at some of the figures published, not by the Tory Central Office or by Transport House, but by an impartial organisation, the United Nations Economic Commission for Europe. In production, in terms


of output per man employed, we lead Europe. Last year British production per man employed was 18 per cent. more than in the average of the four pre-war years. In Sweden, where there is also a Socialist Government, it was 18 per cent., in Ireland it was 13 per cent. and in France 2 per cent. above pre-war. No other European country had got back to the pre-war figure.
In agricultural production Britain again headed the list. [Interruption.] If the gentlemanly party will kindly allow me, I shall continue my speech. Or if we take the level of real income per head, which measures the total value of everything produced in the country, once again Socialist Britain and Socialist Sweden led the way—18 per cent. above pre-war. In Norway it was 17 per cent. above prewar and Denmark came fourth, with 6 per cent. above pre-war. [An HON. MEMBER: "Was Sweden in the last war?"] What is frequently forgotten by hon. Members opposite when they talk about economic recovery is that no allowance is made for the fact that we were in the war. It was only four or five months ago that the right hon. Gentleman the Member for Woodford was brooding gloomily over what he called "the paralysis of our national enterprise, contrivance and genius." Since that time not only our production but our employment and indeed the value of our exports have all risen to a level which is a record in the whole history of this country.
The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) did not this afternoon, and did not on the previous occasion on which he spoke in this House, deny the progress that has been made but he concentrated once again on the problems of the future. He said that he agreed with the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) that it was sad to contemplate the volume of rearmament that lay ahead of us, and to stand amid the wreckage of the hopes that had been held out after the war, even if, as he said, he had not shared them. He gave the impression that he had seen all along that we should need some such programme of rearmament as this.

Mr. Lyttelton: I did not give an impression of anything of the kind.

Mr. Wilson: That was my impression, but if that was not the intention the right hon. Gentleman wished to convey, I will withdraw what I said.
The really remarkable part of the right hon. Gentleman's speech was his reference to controls. He said that a planned economy is incompatible with a free society—I think those were the words he used. At a later point in his speech he went on to develop the notion that while there must be priorities—he said that there ought to be one or two—they can best be left to the business man following the dictates of prices and profits with possibly certain financial inducements, including rates of interest therein. That really was one of the clearest statements we have yet had from the Tory Party of their economic policy and is a clear declaration of their faith in the economic anarchy which we have always thought was their objective.
There was a further significant difference between the speech of the right hon. Gentleman and the White Paper on Employment Policy (Cmd. 6527) published in 1944 which was referred to broadly by the right hon. Member for Saffron Walden (Mr. R. A. Butler) only yesterday; because of course in that White Paper there were put out in considerable detail and agreed between my right hon. Friends on this side and right hon. Gentlemen opposite, proposals which really did amount to a considerable extent of planning and control for very many years to come to ensure full employment. On page 28 of the White Paper it is stated:
Measures to increase total expenditure at the onset of a depression may well he welcome; but the restraining measures appropriate to a boom may meet with opposition unless they are seen and understood as part of a continuing policy for maintaining employment, and accepted as the price that must be paid for the success of that policy over the long period. If action is to be taken quickly enough to have its full effect, the Government of the day must be able to rely on the support and co-operation of the public in applying the principles of an agreed national policy.
What does that mean but the acceptance of some degree of State economy both to prevent inflation and to maintain full employment? That is completely thrown overboard by what the right hon. Gentleman said—[Interruption]. We shall see what he said in the morning, and I think he will agree with what I have said.
The right hon. Member for Woodford this week has been referring to priorities. He talks about getting a certain number of houses by the exercise of priorities. The right hon. Member for Aldershot this afternoon was talking about priorities. He talked about setting the education programme back, although of course he must be aware of the very strong pressure, particularly from the business community, for the extension of technical education. He said that the educational programme should be set back. I hope he will see that his right hon. Friend sends instructions to Tory candidates throughout the country not to try to make capital out of the necessary restrictions on the volume of educational building, as some of them are doing. But neither he nor the right hon. Member for Woodford have made any suggestions of how we can sever these priorities from planning and control.
It would seem, especially from what was said by the right hon. Member for Woodford, that his priorities are not priorities in the real sense of the word; they are priorities in finance. This whole approach to the problem does not recognise the priorities in planning our resources which there must be, especially priorities in terms of material resources. Otherwise the right hon. Member for Woodford would never have said, as one reads that he said at Blackpool, that it would be possible to build more houses by cutting down expenditure on wigs, spectacles and false teeth. The right hon. Gentleman knows perfectly well that wigmakers do not lay bricks, and that dentures do not make satisfactory building material. Unless he is prepared to accept a real measure of priority controls on building the whole of his proposals disappear.
The right hon. Member for Aldershot will realise in the circumstances in which we are moving that there can be very little question of decontrol. Indeed, some of the measures of decontrol which have been undertaken may very well have to be put into reverse. There is already considerable pressure for that in many sections of industry. I have just been reading, for instance, a comment in the paper trade journal:
During the control rationing periods it was generally admitted that everyone got their fair share and, of course, essential purposes received priority. We are afraid that if the present complaints are genuine, and some we know of

undoubtedly are, there is in the present circumstances every possibility of the Board of Trade stepping in again.
It goes on to say:
If the industry cannot control itself then the 'powers that be' will do so and we are sure no one wants that to happen again.
In one industry after another it is becoming clear that certain decontrols, unless they are followed by real self-control on the part of the industry, may have to be put into reverse. I hope that in the case of the cotton industry it will be possible there that the actions of the industry itself will make it unnecessary to consider putting back controls.
I should like to come now to what has been the central theme of today's Debate. I refer to those speeches which dealt primarily with the economic situation and the question of the cost of living. This was, of course, a subject which was very fully referred to in that apparently invigorating conference which hon. Gentlemen opposite had in Blackpool——

Mr. Lyttelton: And at Margate.

Mr. Wilson: —when the right hon. Member for Woodford descended upon the Conference from Mount Sinai or Newmarket, or wherever it was that he came from, and made a speech in which he coined the phrase, "the money cheat." Of course, the question of the cost of living has been the main theme of public discussions since that time. Party capital, as always happens when something serious is affecting the country, particularly from external causes, is being made of this at present.
The hon. Member for Heston and Isle-worth (Mr. R. Harris) yesterday flourished some quotations from the "Daily Express," with a calendar showing what had been going on during the month of October in the matter of increases in prices. The first day it was fares, and the second day it was tyres. I do not think that the hon. Gentleman reminded the House, as he has done on previous occasions, that he is himself the Secretary of the National Tyre Distributors Association. In that capacity he must know perfectly well that the increase in the price of tyres is entirely due to the increase in the world price of raw rubber. That was a fact which could easily have been made clear to the House.
We have had many suggestions that the cost of living could be reduced if there was a change in Government policy. [HON. MEMBERS: "Hear, hear."] But what have those suggestions amounted to? First, that we should abandon bulk buying. That has been the first one; but once again it was an international authority——

Mr. Henry Strauss: Government bulk buying.

Mr. Wilson: Government bulk buying, yes. It was an international authority which said:
The explanation of the relatively low prices paid by the United Kingdom for its imports of food and raw materials appears to lie largely in the extensive use which it has made of long-term contracts and bulk purchase agreements. …

Mr. Lyttelton: Timber.

Mr. Wilson: I thought the complaint of most hon. Gentlemen about the timber this summer was that we were not paying a high enough price for our timber. Let us have a look now at the figures of price increases of the various commodities affecting the cost of living. Crossbred wool is up now nearly nine times compared with the pre-war figure. That is not bulk purchase: it has been on private purchase for three or four years. Cotton, which is on centrally purchased arrangements, is more than seven and a half times the pre-war figure. It has gone up by that amount in all the cotton markets of the world and for all cotton manufacturers whether the cotton is privately bought or bought on public account. Hides and skins bought on private account are five times the pre-war figure. Rubber is seven times the pre-war figure.

Brigadier Prior - Palmer: That has saved your bacon.

Mr. G. Williams: We have not got any bacon.

Mr. Wilson: My right hon. Friend the Chancellor of the Exchequer referred to the discussions now going on at Paris in O.E.E.C. about the movement of world prices and about world supplies. I have nothing to add to what he said this afternoon. As the House knows, there have been discussions with our friends from Australia, New Zealand, South Africa and the United States about wool.
It is very doubtful what can be done to reduce or contain the increase in the world prices of these things. Therefore, we have to take what action is open to us, and my right hon. Friend made quite clear that that action is essentially limited. There is not a great deal that can be done to offset a nine-fold increase in the price of one of our basic raw materials, but if hon. Gentlemen opposite will take any single item and examine how the cost increases are made up at the present time, I challenge them to make any suggestion how they can get these prices down.
If we take a man's three-piece suit, which has been mentioned in the Debate and which is at present retailing at £6 15s., the cost of the raw wool is about £1. Has anyone on the other side any solution to the problem of raw wool bought on a free market? The cost of other materials is 15s. The labour cost is very much higher than it was before the war, because wages have gone up. It is about 30s. Is that an item in the cost of living that hon. Gentlemen opposite feel can be reduced? The retail margin is 30s. Are hon. Gentlemen opposite going to enforce price control so tightly that this should be slashed? When I imposed a 5 per cent. price reduction in utility clothes, there was an outcry from hon. Gentlemen opposite, and the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) addressed an angry meeting at the Central Hall, and, as the "Manchester Guardian" said, added fuel to the flames, or sparks or some such thing.
We all recognise, and I think the more responsible speeches on both sides of the House this afternoon have recognised, that the situation is a most serious one as far as the cost of living is concerned. [An HON. MEMBER: "That is not what the Chancellor said."] That is a complete perversion of what my right hon. Friend said. It is quite clear that the steps which the Government can take by price control and the enforcement of the utility programme and other means must be limited in effect. But it is quite clear that we must retain these policies, and, where necessary, intensify them. We must retain price control, whatever the party opposite would do, and they have never told us; we must maintain subsidies, which it is quite clear it is their intention to slash, because they have said so; and we must maintain the utility programme, which some people are saying


should be brought to an end. Utility supplies have increased considerably over the last six or seven months as the result of the policies which we have followed, and I am sure that we all want to see them continue to increase.
For the party opposite, here, in the country and in the Tory Press, to take this question of the cost of living and try to make it into a party issue, when, on every single item affecting the cost of living, their policies would lead, not to a fall, but to a rise in prices, is completely in line with their policy at the General Election of promising slashing reductions in taxation while maintaining, and in many cases increasing, items of Government expenditure. Like that policy and like their new and intensified policy on the housing situation, it will be seen to be no more than a squalid electioneering manœuvre.

Debate adjourned.—[Mr. Sparks.]

Debate to be resumed Tomorrow.

WASTE PAPER SALVAGE

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Sparks.]

10.0 p.m.

Mr. Nabarro: It is very unusual in this House for the subject of an Adjournment Debate to follow so directly upon the subject matter of the main debate preceding it. A few moments ago, the right hon. Gentleman the President of the Board of Trade referred to growing difficulties in the paper industry in this country, and by a coincidence that is the subject matter of this Adjournment Debate for which I balloted successfully 14 days ago.

Mr. Speaker: The hon. Member is commenting on what has been said in a previous debate. That is specifically forbidden. He should address himself to the subject he has put down for the Adjournment.

Mr. Nabarro: The mundane but very materialistic subject of this Adjournment Debate is concerned solely with the salvage of waste paper and allied materials, primarily for defence purposes. I should, at the outset, declare that I have a remote personal interest in this

matter, in that among my business activities I am the managing director of an engineering company which is a large consumer of the fabricated products directly derived from salvaged paper.
Not only is this matter of salvaged paper of direct interest from a defence point of view, but it also has an immediate bearing on our balance of overseas payments, because, if we are unable to obtain, in the course of the next few years, a sufficient supply of indigenous materials for paper, board, cardboard and millboard manufacturing purposes, it will be necessary to import equivalent materials not only largely from soft currency areas, but also in some measure from hard currency areas.
There seems to be some misapprehension that the salvage of waste paper is concerned primarily with newsprint, and I see that a number of Parliamentary Questions have been put down on this subject during the last few weeks. I should therefore make it perfectly clear that the newsprint industry consumes only 2 or 3 per cent. of salvaged waste paper and, in fact, that industry dislikes intensely to use waste paper because it produces a gravely discoloured sheet which cannot be printed upon easily and which reproduces photographs badly.
May I summarise the principal purposes for which we urgently desire an increasing tonnage of waste paper for defence and general manufacturing? First, a high percentage of the manufactured goods and commodities shipped from this country overseas, for export purposes, are packed in containers other than timber containers, and those containers can only comprise fibre board or millboard cartons, reinforced in one way or another, for carrying packs of up to 112 lbs. in weight. That position has been accentuated very largely since the devaluation of sterling due to the inevitable increase in the volume of export trade, notably articles which are not very bulky.
Secondly, we need vast quantities of salvaged paper for the production of containers for the distribution of essential goods on our home market; and thirdly, for direct defence purposes. The War Office, the Admiralty, the Air Ministry and practically all the Supply Departments at this moment need increasing quantities of containers which the fibre board container manufacturing


industry is finding the greatest difficulty in providing, due to the shortage of salvaged material.
The account came to me—which has since been confirmed, only today—that the buying authorities of the Ministry of Supply were recently seeking a quantity of two million containers for the shipment of essential stores to the Middle East and Far East, and, without going any further into details, I may add that the manufacturers of the containers were in the unhealthy position of having to tell the Ministry that they could only provide these containers by taking them out of allocations set aside for the manufacturers of goods for export; in other words, it became a "tug-of-war" between defence and export needs.
I should like to give a brief history of our salvage arrangements for waste paper during the course of the last decade. In 1939—where I begin in order to get the statistics in correct perspective, as that was the last pre-war year—the total national salvage of waste paper was 750,000 tons. It rose in 1942 to 874,000 tons, a very considerable increase due, of course, to the stimulus of patriotic appeal in war-time and the special centralised arrangements made by the Board of Trade in conjunction with the local authorities. It later dropped, no doubt due to war weariness and over-exhortation, to only 583,000 tons in 1945. Then, in the post-war years, it rose to 796,000 tons in 1949. That figure I commend particularly to the attention of the Parliamentary Secretary, because it happens to represent 30,000 tons more than the whole storage capacity of the board mills in the United Kingdom could absorb.
It was at that moment, in 1949, that the President of the Board of Trade took the decision to withdraw the arrangements left over from the war, for the collection of waste paper by local authorities. The withdrawal of that support led directly to two results. First, some 40 to 50 per cent. of local authorities in the country ceased salvage of waste paper. Secondly, the price of waste paper, which had averaged £6 8s. 6d. per ton f.o.r. for good clean mixed and baled waste in 1949, dropped immediately to £5 per ton or lower. In fact, the City of Edinburgh was left high and dry with a very large quantity of waste paper which the mills refused to accept. In the end, it was either burned

or given away for a nugatory or trifling figure.
Only about 30 per cent. of local authorities today are collecting salvage paper. I have made inquiries in my own constituency, because I am in the what I believe is the unique position of having no fewer than six local authorities wholly contained within the boundaries of my own constituency. The principal local authority, Kidderminster, happens by coincidence—and I do not say this in any parochial sense—to have one of the highest salvage records in the country, which has been maintained throughout the post-war years. It has consistently maintained more than 20 cwt. per month per 1,000 head of population throughout the post-war years and that, I believe, ranks in the highest bracket in the United Kingdom.
I asked the town clerk why that was so. He told me it was due almost entirely to the fact that 300-odd street collection centres have been maintained and that the chief salvage officer was an enthusiastic fellow who had briefed his dustmen and salvage collectors closely and carefully that they were to try and segregate paper salvage and keep it clean. That general enthusiasm and local spirit has been largely responsible for the maintenance of this high record. It is often said that rural authorities cannot collect salvage paper.

Mr. Harold Davies: It is difficult.

Mr. Nabarro: It is very difficult indeed, particularly in the Highlands of Scotland or Western Wales; but in England it is not so difficult. In the case of one rural authority in my consituency, Martley Rural District Council, where there are no fewer than 53,000 acres, with a population of only 11,000 and an electorate of only 8,000 spread over a very wide area, the local authority manage to collect from every house in every village and every hamlet mostly at the rate of once a week or, where that is not possible, once a fortnight. That means that they are still bringing in a very considerable volume of excellent raw material.
I turn now to the position of the mills, which seems to me to be one of the controlling factors. In 1947 the mills consumed 645,000 tons of this material. In


1948 they consumed 770,000 tons. In 1949, by a queer coincidence, the figure was exactly the same—770,000 tons, correct to the nearest 1,000 tons. But this year, that is, in 1950—and I commend this figure again to the Parliamentary Secretary's attention—the mills need 900,000 tons, which is no less than 150,000 tons more than the total figure which is likely to be collected throughout the United Kingdom. Therefore, in 1950 there is a potential shortage of 150,000 tons, and the estimate by reliable authorities—the authority I quote here is the Waste Paper Recovery Association which works closely in conjunction with the Board of Trade—is that the requirement for 1951 is one million tons. Thus there is churned up a potential shortage of 250,000 tons compared with the national collection during the current year. It is that shortage of 250,000 tons which we have to face this evening.
I am sure the Parliamentary Secretary has considered alternatives to waste paper. Many people ask why we cannot import wood pulp. The Parliamentary Secretary will know, of course, that Scandinavia is a generous potential source of supply of wood pulp. I spent three or four weeks during the Recess touring pulp mills, timber mills and paper mills in Norway and Sweden, finding out the facts of the situation for myself, and I discovered that there has been an increase of 250 per cent. in the American demand for wood pulp since devaluation. To quote the exact figures to the House, in 1949 the Western European export of wood pulp to the United States was 176,000 tons; in 1950 the Western European export of wood pulp to the United States will be approximately 440,000 tons, which is two and a half times as great, or an increase of 250 per cent.
The Norwegians, the Swedes and the Western European countries are selling wood pulp to the United States of America not only to obtain hard currency in the shape of dollars but also because they believe they can obtain a high yield and a better price. Even if the Parliamentary Secretary wanted to provide an alternative to waste paper by importing wood pulp, he would not be able to obtain it because the United States have already swamped the market with their orders.
Let me turn to the other substitute. I referred earlier to fibre board and mill-board containers which are largely required for export trade and defence purposes. Uninitiated persons in this matter may say that if such containers are not available, why cannot we go back to the traditional forms of packing in wooden cases? The timber position due to the demands of house building——

Mr. Jack Jones: Hear, hear.

Mr. Nabarro: At 300,000 per annum! The timber position, due to the demands of house building and other forms of capital expenditure is far from easy at this moment, and to obtain a reflection of the exact situation one should compare our imports during 1938 of softwood timber, excluding pit wood and plywood, with our imports of softwood timber during 1949. The figures are illuminating. In 1938 we imported 1,793,000 standards of softwoods, excluding pit wood and plywood. In 1949 we imported 1,079,000 standards. Thus we are importing at present only approximately at the rate of 60 per cent. of the softwood imports during the last pre-war year. That is the reason that we cannot provide more than the present level of approximately 230,000 standards of softwood per annum for the manufacture of wooden containers which might possibly otherwise have provided an alternative to the fibre board containers to which I have referred.
The ball is in the court of the local authorities for waste paper salvage. In 1948 they managed to collect 310,000 tons. In 1949 they collected 285,000 tons. This year they are likely to collect only 250,000 tons. In order to demonstrate the seriousness of the position, I cannot do better than quote an extract from a circular letter from the Board of Trade Paper Controller who, I believe, sits at Reading. It was a letter sent to all the manufacturers of fibre board containers in the United Kingdom: he says:
I am to stress the point that while it is appreciated that supplies of Fibreboard Packing Cases will not be sufficient to meet the full demand, the highest priority must be given to the supply of cases required in connection with the Rearmament Programme and for the packing of goods for export to dollar Countries. The next order of priority should be given to requirements for the packing of goods for export to other Countries. After meeting such requirements the demand for cases for the packing of goods for home distribution"—


and these are the operative words—
should be met as far as possible according to the degree of essentiality of the packing requirements in question.
Hence the Paper Controller of the Board of Trade is fully cognisant of the fact that there is an insufficient tonnage of raw material to meet the full requirements of the defence programme, to meet the requirements of the export trade and to meet the requirements of essential home trade distribution.
The largest manufacturers of fibreboard and millboard in the United Kingdom sent me only this morning a statement of their position in regard to stocks of waste paper. I will refrain for strategical reasons from mentioning the situation of the mill, but it is a mill which employs 4,000 people and which makes 70 per cent. of the board in the United Kingdom. These figures show a stock at this minute of 11,000 tons, representing only a two-week reserve, whereas 12 months ago, immediately after devaluation, their stocks were 45,000 tons, representing a 10-week reserve. They tell me that if these stocks are not increased during the remaining two months of this year, they will feel obliged to take out of production a substantial part of their board-making machinery on 1st January, 1951. There is the seriousness of the position.
May I now address myself, very briefly, to the remedies which I propose for the attention of the President of the Board of Trade? First, the salient point of the problem is to get the local authorities to increase their salvage by an amount of 150,000 tons during 1951, thereby raising their total salvage from 250,000 tons, which is this year's figure, to 400,000 tons, which is the optimum figure for 1951. Secondly, the President of the Board of Trade, in my view, would be well advised to reinstitute his Directorate of Salvage, the campaign officers and the bonus schemes, all of which were suspended in 1949 when the temporary surplus of waste paper appeared.
Thirdly—and this is the most important single point of all—the President of the Board of Trade must assuage the outraged feelings of the local authorities who could not sell their waste paper 12 months ago, and he should do it by arranging with the Waste Paper Recovery Association to guarantee a minimum price for

good, clean, baled waste paper for a period of three years ending 31st December, 1953. The figure I commend to the attention of the Parliamentary Secretary is a minimum figure for this material, in that specification, of £7 per ton free on rail at the particular local authority loading point.

Mr. Harold Davies: That is 10s. more than the present price.

Mr. Nabarro: The present average rate is £6 8s. 6d. per ton. So that my suggestion would mean an increase of 11s. 6d. per ton in the guaranteed minimum price.
The fourth point is, I believe, equally important. Local authorities should be stimulated to instruct closely their salvage personnel and everyone in their employment so as to ensure that all waste paper collected is not just thrown into the refuse bin along with a mixed bag of other materials, because if that happens it becomes valueless. The average dustman and salvage collector is an intelligent and conscientious human being. He is perfectly willing to comply with the requirements of the local authority but, like every other human being, he will respond to a proper incentive, and those local authorities which offer their dustmen and salvage workers a bonus are those which generally succeed in making the greatest tonnage contribution to the common pool.
Fifth, the Waste Paper Recovery Association, which is the national body to which I have referred, in conjunction with the President of the Board of Trade, should set a target for the tonnage of waste paper to be collected by every one of the 1,600 local authorities in the United Kingdom in the year 1951, and the total of this tonnage should be 500,000, which is exactly twice the amount the local authorities are collecting at this moment. I realise that 500,000 tons would be 100,000 tons more than the optimum figure I referred to a few moments ago, but it is far better to set a target high and achieve most of it and to have a margin of safety, for none of us knows, in the next 12 months, the ultimate requirements of the defence programme.
Finally, the President of the Board of Trade should confer with the Chancellor of the Exchequer to see whether we cannot remove Purchase Tax from the capital


equipment for salvage—from the specialised type of salvage vehicle one sees in the streets of the City of Westminster, for example, and which is carrying at the present time a quite high rate of Purchase Tax. To do so would lessen the capital expenditure of the local ratepayers. When he replies the Parliamentary Secretary will, I hope, be able to deal briefly with these six commendations in order to meet the very urgent and pressing raw material situation in the paper board and allied manufacturing industries.

10.21 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Rhodes): I am very much obliged to the hon. Member for Kidderminster (Mr. Nabarro) for raising this subject tonight, for he gives an opportunity to the House to consider it, and I trust that publicity will be given to the discussion, and that that will give to the local authorities a spur and an incentive. I should not, perhaps, interpret the statistics that the hon. Member has given in quite the same way as he has done, because the latest available returns of mill stocks show that during the four weeks ended 30th September the amount of waste paper collected was the highest on record for any monthly period, with the exception of one month in 1942 when the first big national appeal for waste paper was made.
Collections of waste paper of all kinds amounted to 17,171 tons per week in September, compared with the average of some 15,800 tons per week for the first half of this year. The difficulty is that consumption has been increasing also. There is no doubt about the fact that during 1950 we have been eating into our previously accumulated stocks. The time has come now when, with reserves dangerously low, we must again make a major drive to increase collections.
The key to the whole situation, as the hon. Member has pointed out, lies in the separate collection of waste paper by the local authorities. Many authorities have given up this collection, partly for the reasons which have been advanced by the hon. Member and partly also because of the relatively low price which, for a time, the mills were prepared to pay for waste paper. I would point out to the hon. Member that at the same time that the mills were stocked with waste paper,

so were the sheds of the local authorities; and because the mills were a little bit uncertain about their ability to use waste paper, so the price was reduced, and I understand that, although he quoted a price of £6 a ton as being the average last year——

Mr. Nabarro: May I interrupt the hon. Gentleman? It was £6 8s. 6d. per ton.

Mr. Rhodes: But at the lowest last year it was reduced to approximately as low as £4 a ton, which was not really an incentive for the local authorities to go on with their collections.
The first need is to bring about a resumption of collections in those urban and semi-urban districts where collection can be an economic proposition. There will always remain scattered rural districts where without the help of a Government subsidy the collection of waste paper could only be a heavy charge on the local rates. Whilst I do not wish to discourage the collection of waste paper in rural areas, perhaps for the present we can concentrate our attention on the urban or semi-urban districts. If these areas co-operate wholeheartedly, the amount of waste paper which could be collected would be sufficient to meet our needs.
It has been suggested that we should restore the Directorate of Salvage at the Board of Trade. I am sure the hon. Gentleman realises and understands that that is not a practical proposition. Once it has been handed back to private hands, the ordinary law of supply and demand should be given a chance to operate. After all is said and done, it has only been handed back for 12 months, and during that time there have been many ups and downs. My right hon. Friend the President of the Board of Trade asked the Waste Paper Recovery Association some time ago to let him have a fresh scheme for increasing collections. I suppose the hon. Gentleman would agree with that.
The hon. Member asked particularly that the scheme should be on lines calculated to appeal to local councils, and I am glad to say that the Association has now come forward with a plan. Mills have guaranteed to take all the paper that local councils can collect, and to pay a fixed minimum price of £6 10s. per ton for mixed waste paper until the end of 1951. I do not want the hon. Member to go away with the idea that it finishes


at that. I understand that it will carry on.

Mr. Nabarro: Mr. Nabarro rose——

Mr. Rhodes: I cannot give way. I must be allowed to continue at this hour.
This is a substantial improvement on the price ruling earlier this year, and should give those councils who have ceased collection that continuous guarantee which they need to encourage them to begin again. It will offer a higher return to those who have carried on. This price is a minimum. Higher prices are offered for the better grades of sorted wastepaper; and even for mixed waste paper, whenever the market price is higher than £6 10s. a ton the mills will pay the market price.
We intend to take steps to bring this offer to the notice of all councils in the more populous areas, and I hope this will mean that a special effort will be made to resume or increase the separate collection of waste paper. Not only does this offer a means of reducing the cost to the rates of the collection of refuse which every council undertakes, but I agree with the hon. Gentleman that it is a matter of national importance that the recovery of waste paper should be substantially increased.
The hon. Gentleman did make one or two more points about the payment by results to dustmen. I think he will agree that that is a matter entirely for the local councils. I hope, as he does, that the

publicity which I trust will be given to this Debate will spur on the efforts of local authorities to help in the salvaging of a very important commodity.

Mr. Nabarro: In the one remaining minute, would the Parliamentary Secretary respond to just one more point? I do not believe that the price guarantee until the end of 1951 only, in spite of his assurance that it will continue, will sufficiently assuage the feelings of the local authorities. Will he reconsider the length of the guarantee?

Mr. Rhodes: It is not really up to the Board of Trade. After all, the hon. Gentleman has admitted his interest in the trade, and the Waste Paper Recovery Association is the body which is offering, or at least negotiating, the price. It is really up to him to put on pressure so that the length of time can be extended. I think he will agree with that.

Mr. Harmar Nicholls: What about priority for vehicles for local authorities to go round collecting?

Mr. Rhodes: I am afraid that is another question altogether.

The Question having been proposed at Ten o'Clock and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Half-past Ten o'Clock.